Investors always want to be the one to find the new up and coming suburb before it booms. But what are the signs to look out for?
There are a few simple research tips listed below that can help get you ahead of the crowd and scoop up a bargain before the properties rise in value.
Lower vacancy rate
Usually, when a suburb has a lower rental vacancy rate, it means the area is in high demand from renters. If a suburb has a vacancy rate below 3%, it usually means there is a shortage in rental properties. As a result, rents can often increase and investors will start to buy in the area attracted by the returns that the rising rent is delivering. This increases demand by investors and could lead to an increase in property values.
Number of days on market
The average time a property is on the market can give you an idea about the state of the market in that area. If the amount of time is lower than the overall city average, it means there is a stronger demand for property in that area. The lower the number, the higher the demand.
But you will need to look a little further than just the average days on market. Short average days could occur when a suburb has already peaked, so you will need to look for more signs and not just rely on this one.
Number of auctions
When there is a strong demand for property, real estate agents will often try and sell more properties at auction so that buyers can bid against each other and hopefully push up the selling price. High auction clearance rates could be a sign that the suburb is set to boom.
Another way to tell if a suburb is picking up is by looking at the vendor discounting. This discount is the difference between the seller's asking price and what the final sale price is. If the discount is larger, it indicates that the buyer is in control and the seller is willing to accept a lower sale price, which could mean the market is falling.
However, if the discount is smaller, it could mean there is a higher demand for property and the seller is in control of the sale. This could also be a sign that property prices are on their way to increasing.
Many investors forget to look at the public transport of a suburb and what future development plans there are. If the government has plans to develop the roads, rail or bus lines in a certain area, it could be a sign that they are expecting a boost in population growth.
Have a look at the local council websites for any future announcements and also keep an eye on the local community news. These sources can give you early tip offs about any proposed changes for the area and can let you stay one step ahead of the rest.
If you are searching for properties, it is advisable to have your finances pre approved. To get a quick indication of how much you can borrow, try our Instant Online Pre Approval. It takes less than 2 minutes and gives you information on the interest rate, repayments and how much you can lend. When you are ready to formally apply, you can do so from your lounge room using our Online Application. Remember help is only a phone call away so call 13 72 62 to speak to a Lending Specialist.