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How to Identify Areas with High Property Growth Potential

Aug 19, 2021 | Property Investing, Purchasing Property

Identifying potential property hotspots before they start taking off is key to maximising your profit and minimising investment cost. Otherwise, prices start to shoot through the roof and you’re paying more than you need to. 

So, today we’re going to look at important indicators – supply and demand, sales data, etc., that a suburb is tipped to boom.

Supply and demand

The supply and demand ratio is a leading factor in property prices. If there is a high demand for houses, yet there is no more capacity to build, property prices go up.

Here’s how to spot high-demand, low-supply areas:

Look for areas with high rental yields

Increasing rental yield means the area is becoming popular among renters or that there’s a strong demand for rental properties in the area. 

Look at the population growth

When population growth increases, demand likely increases, too and that’s when prices can rise. 

However, looking at population growth alone can be a misleading factor, you also have to look at other factors such as rising income and low supply to have a complete picture of what the property growth will look like. 

Property sales report 

When searching for property areas tipped to boom, it’s important to look at the sales data. You can access them online or through companies that send newsletters to keep you up to date. 

These sales data provide you valuable information about the area’s property growth, such as capital growth rates, median house price, latest sales results, and others.

A detailed property sales report gives you an estimate of the current property prices by comparing it to past sales data and similar properties. So, this will provide you an idea of what the property growth of a certain area looks like and determine if it’s already reached its property prices peak. 

Employment growth

People are inclined to go to places where the opportunities are. So, when there’s an increase in job opportunities, the demand in the housing markets also increases and puts pressure to raise prices. 

“When there’s employment growth in the area, there’s the wages growth would be as well. And when people can afford to live there, that’s what’s pushes property prices up,” says Michael Yardney,  CEO of Metropole.

Property values rise

When property values are rising in short to medium term, it might indicate that investment properties in the area are tipped to boom. 

Though people often think of property prices as the first place to start, slight price growth may mean they’re too late. An earlier indication could be “Active Days on the Market” – markets that are getting sold quickly might be a sign that it is a booming market. 

Vacancy rates 

Vacancy rates is a metric that indicates whether rental properties are in demand in the area. If vacancy rates are high, it means people are not renting in the area, but if vacancy rates are low, there’s a strong demand for the area’s rental properties.

Areas with low vacancy rates could mean a potential investment property for you. 

However, it pays to consider other factors that can influence the area’s property market, such as consumer confidence, employment data, interest rates, and the market cycle. 

Infrastructure developments

Infrastructure developments mean capital growth for real estate investment. When developments in the area, like train lines, roads, or bus services are made, it contributes to ease of travel. This increases rental rates and the lifestyle appeal of the area. 

Infrastructure projects also mean creating jobs either during construction or even after the completion of the project. For example, when hospitals, airports, and other infrastructures are developed, it also provides thousands of jobs after the project is done.

So, when looking for potential property investments, search for planned infrastructure around the area that may impact the property values. You can look at the local council or government transport websites. 

Final Thoughts

There’s no sure way to know the property growth of an area, but by looking into the above indicators and diligently doing the research, you may find the potential property area that might give you a massive return on investment. 

If you’ve been researching a suburb and have an eye on your next property, book a call with us. We’d like to help arrange finance for it and make it seamless for you.

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