With the national property market limping along at an uninspiring pace, it might be hard for investors to foresee any prospects for capital growth.
But there are always property markets geared for growth – you just need to know what to look for. Moreover, smart investors know that going against the grain and buying at, or close to the bottom of the property cycle offers the greatest scope for capital growth.
The best returns will only be found in markets that are poised for growth. But where exactly can these be found and, more importantly, what pushes prices up?
Even though the national economy is often considered a single force, in fact it is made up of many small economies and it is understanding exactly what is taking place in these smaller economies that will really place you in the best position to make smart investment decisions.
Supply and demand is what shapes any economy and one of the biggest drivers of demand is a growing population. Areas experiencing an increase in inhabitants will often experience rising property prices. But remember to delve deeper than population growth alone. Explore vacancy rates, local development regulations and developers’ plans as well.
Demographics are just as important as the location of a growing population. Investors should also consider how populations are changing. If you know the local demographic trends, you’ll be better placed to select the right property to suit market demand.
Strong employment drives population growth, which in turn drives demand for property. Look for areas with a number of strong industries and avoid those that are dependent on a single industry.
Infrastructure and amenities are a major consideration as no city, town or property market will do well in the long term without it. Target locations with strong investment in infrastructure or where high-quality infrastructure already exists. Focus on infrastructure that will bring long-term benefits rather than a short burst during construction.
Urban renewal makes the demand for inner-city property stronger than ever. Many well-located suburbs in the nation’s capitals, which may previously have been considered undesirable, are undergoing significant redevelopment. Such changes can have a huge impact on real estate prices. To tap into these markets, seek out well-located suburbs that haven’t yet experienced a renaissance but adjoin one or two that already have.
Government plans and policies can offer a good indication of an area’s growth prospects. A local council with a growth mindset will encourage development, thereby fostering investor activity and housing. Monitor news and the announcements made by local councils and governments and visit them to find out what their intentions for growth in the area are.