Property Hot Spots: How To Predict the Best Places To Buy

Historically real estate has always been a good place to put your cash. It’s an asset you can feel and touch – unlike stocks or shares – which makes investors feel safe. And, in the right place and time, property can grow in value while you sleep, meaning as an investor you don’t have to do much to increase your personal wealth.

But as investors, how can we better predict the next hot spots for real estate investment so we can get in at the right price? How do we know the best places to buy that are guaranteed to grow in capital value, return regular rent increases and ensure future personal wealth?

BE AN ACTIVE, ENGAGED INVESTOR

ANZ bank recently adjusted its “pessimistic” forecast of a 10 per cent drop in capital house prices, to a more positive outlook, predicting a rise of 12 per cent in Perth, 9.5 in Brisbane and 9.4 for Hobart. 

That’s all good news. The only caveat is that smart investors got into the Brisbane and Hobart markets years ago when prices were low and started to rise. 

Property investors who are able to better predict how a market is going to rise or fall are paying close attention. They’re on the ground watching what properties are selling for, keeping track of reserves vs sale price and going to auctions. 

In simple terms, they know the market because they’re investing some time and energy looking at it. And if they’re new to investing and they’re smart enough to know what they don’t know, they’re asking experts, like the team at TRC-Gorod, to help them on their journey.

SEE THE POTENTIAL OPPORTUNITIES

Events such as COVID-19 understandably rattle our cages and scare people off spending or investing. People like stability. But the truth is, COVID-19 or not, real estate markets are ever-changing and property values go up, and down, then back up again, all the time. That’s the reality of property and why we say it’s a long game, not a quick fix.

Being able to see past the scary headlines and see future opportunity, where others just see risk, is a great skill to have as an investor.

Currently, Melbourne property prices might be feeling the pinch. The Australian Bureau of Statistics reported a mass exodus of Melburnians in the three months to the end of June 2020, with people fleeing the city and prolonged COVID-19 lockdown periods, for regional areas with fewer restrictions. Property prices in the metro area dropped, as did rents, and vacancy rates for rental properties increased.

With all that doom and gloom you could be forgiven for avoiding Melbourne like the plague.

But all projections show that the city will bounce back and long-term effects will be slim to none. Add into that the fact that the Victorian government has recently announced billions of dollars of investment into infrastructure, which will grow the state’s economy, create jobs and drive-up property prices. Suddenly investing in Melbourne looks like the smart thing to do.

REMEMBER THE GOLDEN RULES

It can be hard to make absolute predictions about where to buy property, but there are some golden rules that never fail us.

1. Stay close to the action – You don’t want to buy a property that’s more than a 30-minute drive from the CBD or a place economy. Proximity to infrastructure, jobs, opportunity and desirable lifestyle is always going to drive property prices in the right direction.
2. Do your numbers – Make sure you have enough money to make the purchase you want and stick to your own budget. Ensure you have a personal buffer should your own circumstances change, and a buffer for each investment property you own.
3. Location trumps property type – Say you have $400,000 and that will get you a one-bedroom apartment in a place that attracts money, wealth and a highly liveable lifestyle. Or it will buy you a four-bedroom house out in the bush, hours away from a decent coffee. Location trumps property if you want low vacancy rates, high rent and steady capital growth over time. 

HOW TO PREDICT WISELY

Need help in predicting where to invest in property?

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