Investing in real estate is a complex decision that can be impacted by a number of factors. Property investors are often told that location is everything. For this reason, it’s important to understand how to successfully choose up-and-coming areas as early as possible.
Chosen locations to buy property undergo a chain of changes which signal potential growth. At Ausin Group, we have compiled 7 ways property investors can successfully choose up-and-coming areas.
Property investment should start with an understanding of the local population. Their opinions and lifestyle aspirations impact the property prices within that market. Researching the demographics is an important step in getting your location right.
A property market is dictated by the people who live there and their consumer habits. Current drivers can prelude future growth, so researching the emerging subgroups is also crucial if you are considering investing in real estate.
Baby-Boomers and Generation Y will have varied needs and wants. They will shop in different areas and enjoy unique hobbies. To choose up-and-coming areas to invest in, you should examine the changing demographics in detail.
High Income Growth
The average family unit will buy their most expensive property from the age of 40, due to expanding numbers and a higher income. Does this mean that chosen locations to buy property should appeal to people who fit this segment?
The short answer is no. While the cost of living has increased, so has wage growth. When we earn more things cost less and more money is available for us to spend on property. Some goods are becoming cheaper over time, leaving incomes more likely to be directed into the property market.
The real estate ripple effect creates movement in the market, impacting clusters of local suburbs. In order to understand the potential of the area you’re interested in investing in real estate, you need to research the surrounding suburbs.
If the average price of a home in one suburb varies from its surroundings, then this could be a smart move to invest in before the high growth hits. Choose up-and-coming areas by comparing the history and current status of the wider region.
Chosen locations to buy property will have early signs of upcoming change. Developments and infrastructure improve the quality of services and opportunities. It also feeds into the ripple effect that property investors should look out for.
New developments are an important consideration when investing in real estate. They encourage social, economic and cultural change. This can speed up shifts in demographic, driven by new jobs and infrastructure.
Down the track, this can impact house prices and perception of lifestyle within the area, resulting in gentrification. It’s easy to get lost in the ripple effect but property investors should remember the bigger picture. The effect occurs as a consequence of an action, so a risk management strategy should always be implemented as a precaution.
Local Council Research
Local councils are a great source of information. Property investors can work alongside them to identify chosen locations to buy property. Councils are especially useful in discovering whether the area is in mid-transformation.
Ask your local council for information on economic growth projections, employment trends and commitments to education. They will also have research on retail and office space allowances for new business, as well as land zoning.
Property investors can better choose up-and-coming areas based on services and education set aside for future development, roadworks and so on. All of this will help you to understand the potential of the suburb.
Property investors should understand the reasons why a resident would choose to settle in a particular neighbourhood. A big draw card can be a business. When a brand new supermarket or coffee shop moves in down the road, this is a positive sign that things are changing.
Most established companies will also do their research and projections before deciding to start in the area. This way, you can be sure that the location has already been checked out for strong fundamentals.
Standards for residential development are higher now more than ever, resulting in a new quality of living that many established homes can’t offer. New residential developments are more functionally designed and affordable.
Investing in real estate in an area with a high level of upcoming residential development ensures that the suburb will continue to attract people as there is continuing activity.
Property investors should look to this competitive advantage, as new residential developments attract young buyers looking to enter the market. To discuss your options for future investment opportunities, contact Ausin Group today.