Booming Suburbs for Property Investment
How do you find the next booming suburb?
There is a huge amount of historical data available on property these days. House prices, rent rates, interest rates, macroeconomic data, microeconomic data and other financial data that all could be relevant. So how do you find the next booming suburb? What information should you be looking at?
Analysis has shown that the most successful piece of information in predicting the growth in the housing market is not interest rates, or population changes, or number of dwellings constructed or any other intuitive predictor of house price movements.
The best predictor is simply the historical trends in the market. In other words, the best place to look is the rear vision mirror. There are a number of free as well as commercial services in the market that give this information.
But what about the more strident investor, how can they peer into the future and find a new hot suburb or town or region? Some of the best performing suburbs in recent years have been in new areas, for example in the outskirts of Adelaide or Brisbane or Perth or in some of the booming coastal towns of Queensland. There is a trap however: some of the new hot suburbs are subject to economic factors which, if reversed, could cause prices to fall.
New hot spots are created by migration to that area usually on the back of some economic activity or major infrastructure like a port or new freeway or new shopping mall. These are important indicators but large capital cities are safer due to their multi factorial economies and consistent migration patterns. That’s why investors tend to stick to main capital cities and look for areas within these urban areas that have good a 10-year price growth track record.
Filed Under: Property Investment
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