Investor's Goldmine: Discover the Top 4 Metrics for Identifying High - Value Properties - December 2023
December 12, 2023 / Written by Rich Harvey
No two suburbs in Australia are the same, with neighbourhoods having their own unique identities that determine what they’re like to live, work and play in.
These qualities help inform what type of housing market exists at a suburb level, too, because as we know, there’s no single Sydney, Melbourne, Brisbane or Perth property market. There are dozens, if not hundreds of micro markets within each city.
All of that said, there are some key metrics you should examine when deciding whether to explore a particular area. It doesn’t matter where it is, there are common factors that can indicate whether its prospects are promising – or not.
Here are a few of the key metrics that I look at whenever I’m assessing the investment suitability of an area.
What the locals are like
One of the key things to uncover about a suburb is its demographics.
What kind of people live there? What do their lives tend to look like? Is the area made up of mostly renters or mostly owners? Are there lots of families or not very many? Does it skew younger or older?
All this information is vital – and often for different reasons, depending on who’s buying. Knowing as much as you can about a suburb’s make-up can be the difference between making a good investment decision and a subpar one.
The Australian Bureau of Statistics has a pretty nifty interactive tool that draws on the latest Census data to display suburb-level insights.
One of the first thing I look at is the split between owner-occupiers and renters. If the area is predominantly home to people who lease their homes, you’re likely going to be re-selling whatever you buy to other investors, who are more prone to market whims and are less likely to buy (and pay) with emotion. On the flipside, a suburb with very few renters might not offer an attractive cash flow proposition if you’re looking to invest.
You can see how culturally diverse a suburb is, which can often skew its vibrancy – and its dining scene. There’s information on how old people are, what income they earn, whether they work or don’t, how far from home their place of employment is, the most common occupations, how they get around, and more.
There’s data on how many families live locally, the dominant dwelling type, how many bedrooms a home has on average, how many people live in a dwelling, the number of share houses, and more.
How does this help you? Let’s say you’ve come across what you think is a great deal. It’s a cheap-as-chips studio apartment with a long-term tenant. The yield looks decent on paper. What’s not to love?
You dig into the demographics of the suburb and discover that there are very, very few studio apartments, making this property a rarity – and potentially hard to move when it’s time to sell. Not only that, but there aren’t too many renters in the area, so if that tenant falls through, you could struggle to find a replacement. The median income is high, so the demand for a comparatively cheap property could be low. On top of that, the majority of people in the suburb use their cars to get around, but this apartment doesn’t have a car park.
Each thread of data you have can be woven together to create a rich tapestry.
This seems like an obvious one, but the median home price is a critical metric to be completely across when you’re looking to buy.
And it’s about much more than just the single median house or median unit price figure. You want to get a handle on what’s happened to it over recent and historic times.
Getting this kind of up-to-date data can cost money if you go to big research houses direct, but property portal realestate.com.au has rich profiles on every single suburb across the country. Price points are updated each month as new data rolls in.
You can see what an area’s median house price and median unit price is. You can get information on what recent growth has been like. You can even chart its movement over the past five years, potentially identifying trends that impact value.
The suburb profiles even offer insights on how many listings are currently active, the number of sales over the past year, how long a home in that area spends on the market, and the average number of buyers looking in that specific pocket.
And it even breaks down the median price by dwelling type – a two-bedroom vs 4-bedroom house, a two-bedroom vs one-bedroom unit, and so on. We use sophisticated data sets that can track the median value in different segments of the same suburb. Our Buyers Agents know which parts of the suburb perform better than others and can pin-point the so-called golden triangle in some areas.
That’s hugely valuable information if you’re looking to buy.
Being across all things median price means you can also know how to spot a potentially good deal when something pops up that’s below it. Of course, cheap doesn’t mean good, so do your due diligence. I tend to personally at just above median price to get a better-quality property for the long term.
Whether you’re buying a home to live in yourself or looking to invest, the state of the rental market is an important consideration.
It gives you a sense of the suburb’s current pulse when it comes to lease dwellings. If they’re rising in price, rentals are in demand and your potential new neighbourhood could be on the up and up. If they’re falling, demand might’ve come off the boil – or supply could’ve substantially increased.
Once again, the realestate.com.au suburb profile offers a wealth of data on localised rental markets, including current median weekly rents for houses and units, recent growth and changes over the past five years, the number of places currently available, how long a place is available before being snapped up, and the number of people currently searching.
Most local councils have interactive online databases (DA Trackers) showing you all current development applications and recent approvals granted.
You can jump on and explore your target suburb’s potential changes before they occur. You might discover there’s a big brand-new block of units slated for a site around the corner from you, which might impact supply. You could find a proposal for a major urban renewal project that might spell gentrification. You could see that there’s a flood of major renovations of old homes, indicating a possible uplift in values as the suburb’s character improves.
This information is usually free and easy to access. Contact your local council if you need help getting started.
Knowledge is key
When it comes to buying, being armed with as much information as possible will put you in the best possible position to make an informed and sound decision.
It’s also worth tracing trends over time. Don’t look once and never look again – keep your finger on the pulse so that if there’s a shift, you’re ready to take advantage. Also, compare local data to state-wide metrics to see how the suburb stacks up against others.
And if you want someone to take on all that grunt work, enlist the services of an expert, qualified and experienced buyer’s agent.
To have one of the friendly Propertybuyer Buyers' Agents to contact you:
call us on 1300 655 615 today.