If you're a keen property investor, some Melbourne suburbs are likely to deliver a much bigger return on your investment in others. For example, in 2013, the suburb of Kingsbury outstripped the competition to deliver recorded growth of 30.2 percent. Of course, after the event, it's easy to spot the places where you might make a return, but it's also generally too late by then, too. So what should you consider when trying to spot the next big investment? Here are three ideas.
Remember you're not the only one looking
Property remains one of the most valuable investments in Australia. Given that a ten percent increase in value could equate to more than $100,000 in some places, it's easy to see why so many people speculate, and this is one of the most important things to consider. There are thousands of property investors in Australia, which means that there are lots of other people looking for the same market hot spots to exploit, so you need to prepare yourself for some stiff competition.
Of course, timing is everything. Most investors have limited cash reserves, and many people tend to focus on a specific market niche. For example, some people want properties that they can market to young professionals, while other developers want to tap into the property market for wealthy foreigners. As such, it's important to devise and stick to a strategy that focuses on a particular market segment. When you know what your buyers need, you can more easily predict where they might have to go to get it.
Understand your target market
Understanding your target market is not just about trends in property sales. In fact, if you want to tap into up-and-coming areas for your target buyers, you need to get a detailed insight into the lifestyle that your prospective owners will consider. There are plenty of signs to look for. These include:
In many cases, you may need to act on a proposal before it becomes a confirmed plan. For example, if a company announces plans to move to an area, you may find yourself up against less competition from other buyers than a suburb where the company has already confirmed the move. Your willingness to speculate could improve your chances of a significant gain, but if the company's plans change, you may not make the profit you hoped for.
You shouldn't overlook the obvious
Many of the signs of potential growth are quite easy to spot. For example, if a suburb has shown substantial growth in a specific period, you can reasonably assume that neighbouring suburbs will start to show reasonable price increases within a similar period. As such, there's no harm in simply following the trend. With relatively limited effort, you can track property price increases on a map, and it won't take much effort to predict where buyers will go when prices increase in a certain suburb.
Experienced property developers also know that new coffee shops, delicatessens and niche boutiques are a good sign of increasing affluence and disposable income. Conversely, new chain stores, supermarkets and banks are all signs of stability that may suggest property prices will soon stall.
If you want to invest wisely, it's a good idea to buy property in an up-and-coming area. Talk to a real estate agent for more information and advice.Share
31 March 2016
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