Seven keys to suburb magic
When it comes to identifying the best suburb for your search, you can drive yourself mad looking at all the available data. We see two key issues resulting from this – people either give up and just choose anything, or they stay on the sidelines and don’t choose anything.
While there isn’t really any short cut, some data points are more useful than others. We use an extensive range of data points to select a suburb, however there’s a few that we believe provide much more insight into a suburb than others. Listed below are our seven leading keys to unlocking suburb magic (love those puns).
- You – at the risk of sounding completely boring – the first data point to analyse is the strategy you’re looking to use. Does this require a development block, cash flow property, commercial property, home or investment or both? Consider your budget, and any ‘preferences’ you have such as the State, styles, and portfolio requirements. Surprise! You are one of the keys to your own success.
- Population v gentrification – good researchers will know to review population size and changes, but drilling further into age groups will reveal the mix of future property styles and demand for an area. For example, if the largest age group is 0 – 14, it’s likely that families are growing and may have a tendency to remain in their properties for a longer period. Good sources of this information can be obtained from your local Council, but we’re looking forward to the next national Census (scheduled for August 2016). We like to link data points together, and often couple up population data with renovation or building activity. Council DAs, personal observation and even Bunnings activity can provide information on this point.
- Employment diversity – examples of getting this right really came to the fore with the downturn in the mining industry. Ideally, look for locations where there are numerous opportunities for employment. Consider also tracking travel times to employment (which could change if we get the VFT). This works well for those focussing on a ‘buy and hold’ strategy, but will also inform your choice if you have a ‘buy and sell’ approach. For example, if a new employer causes a town to start bursting at the seams, ‘buying – developing – selling’ could deliver opportunities.
- Transport / infrastructure – currently we’re seeing an increase in transport and infrastructure (roads, hospitals, schools, community facilities) in most States and Territories. Tracking the changes is a good way to find suburbs with potential for capital growth, and also to purchase opportunities due to changes in use (eg – from residential to multi-storey dwellings). Just don’t chase this data point as your only guide, as your purchase will need to match the stage of the change. That is, there will be no point buying an investment unit if there are lots of families looking for properties with a backyard.
- Surrounding environment – look at the activity in the areas surrounding the suburb you are considering. If pricing and demand is trending upwards, the next suburb to experience a positive change could be right next door. Here’s a tip though . . .if your suburb is surrounded by lots of vacant land (ahh . Springfield), don’t buy a new house thinking you will have capital growth anytime soon. The flipside to this would be Oran Park in Sydney, where all the surrounding area is zoned for future development and the infrastructure is already in place.
- Days on market – this one is a lovely key to identifying opportunities for a range of strategies including renovations, capital growth and cash flow. Look at the number of properties in your property type measured against the time it’s taking to sell the properties, and (if you can source it) the time it’s taking to rent the properties. If the number is trending down, the market is heating up.
- More than just the median – many researchers will quote the median prices (the mid point between the highest price paid for a property versus the lowest price). This is such a misleading indicator of the true activity in a suburb (oh and I can’t resist the opportunity to smash those people who quote a whole State’s median which is such a useless thing to do). At Crave, we use medians, albeit at a granular suburb level, but we also review the highest and lowest prices paid in the area. This provides details about potential for equity increases and realistic feasibilities for renovations and developments. Just make sure you’re comparing prices for your specific property size and type.
One little warning shot for the data crunchers – past capital growth is not an indicator of future capital growth. Yes, it is worthwhile considering it, but capital growth is a lagging indicator and it should be used in that framework. We’re not saying a suburb that has had capital growth won’t have it in the future, just simply that it is not useful to use as a predictive indicator. The data points listed above are better indicators of future changes
At Crave, we’re mad, keen researchers so we use a multiple range of systems, research services as well as conducting our own fresh (primary) research into each area. Fresh research is required because suburbs are constantly changing, particularly at present with governments actively working on new infrastructure. In addition to the above, there are other indicators to finding the right suburb to match your needs. Listed below is a summary of the data points we consider when helping our clients choose a suburb.
Buy smarter = limitless ways to build lifetime income
Crave Property Advisory is a unique property strategy and buyers agent service. As the only independent and unbiased advisory that can help you use any property strategy Australia-wide, Crave’s services extend to home, investment and commercial property. A highly client focused organization, Crave developed the Modular Investing System (MI System) to provide clients with the ability to use a tailored mix of strategies and efficiently build profitable portfolios that create lifetime income.
Debra Beck-Mewing is the CEO of Crave Property Advisory, and has more than 20 years’ experience in property investing, Australia-wide. She has used a range of strategies to build her property portfolio including renovating, granny flats, sub-division and development. Debra is skilled in identifying development opportunities, and sourcing properties that have multiple uses and multiple exit strategies. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business.
Disclaimer – This information is of a general nature only and does not constitute professional advice. We strongly recommend you seek your own professional advice in relation to your particular circumstances.
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