As a budding property investor, spotting potential opportunities is crucial.
Here are six simple clues to help you identify when property values are on the verge of rising in suburban areas.
Low Vacancy Rate
A lower vacancy rate often signifies that there is a high demand from renters. Research the vacancy rate of a suburb, and if the rate is below 3%, this usually indicates that rental properties are in scarce supply in that particular area.
High demand often leads to rental price increases. Higher rental prices are attractive to property investors; this could lead to a spike in property values.
Number of Days On The Market
The length of time property is on the market can provide you with some clues about the property market in that specific area. Check the city average; if the length of time is less, it indicates that there is high demand in that area.
Extensive research is necessary when searching for potential investment opportunities. Less time on the market could also indicate high property value. Therefore, it is best to extend your research beyond the number of days a property stays on the market.
Number Of Auctions
When demand is high, real estate agents and property sellers attempt to sell more properties to create competition, which often leads to price increases. An increase in auction clearance rates could signify an imminent property boom.
Vendor Discount
Research vendor discounting, this will give you a greater understanding of market trends in your chosen suburb. The discount is the difference between the asking price and the price upon sale.
If there is a significant discount, this could mean that the buying power is in the hands of the buyer, this is often a sign of market decline. However, if the discount is insignificant, this could signify that property values are set to rise.
Infrastructure Improvement
Conduct research on infrastructure growth and improvement. Find out about development plans, road, and public transport plans. Infrastructure development plans are vital because they usually provide clues about future population growth.
Population growth will mean higher demand for housing, which could eventually lead to a rise in property value. Timing is everything when it comes to property investment, delving deeper into infrastructure growth could provide you with some hidden clues about the property market.
Take a look at council websites to find out about immediate development plans.
Percentage of Stock On The Market
An analysis of the percentage of stock on the market can provide essential clues on the state of the market in a particular suburb. Look at the number of properties on the market as a percentage of the overall number of properties in an area.
If the percentage is below 2%, this could mean that supply is low, and price increases could be a possibility if demand increases. If the overall percentage is say 3% or more, then this could signify high supply and low demand.
Summing Up
When searching for clues about the state of the property market in a particular area, it is vital you conduct thorough research on all aspects of the area you have chosen.
For example, rental property shortage could be a sign of high demand; however, it could also indicate that property values have already risen.
Analyze all factors to make intelligent, informed decisions about whether or not to invest in property in a specific area.
