Whether you are a seasoned property investor or just starting out, being able to spot an up-and-coming neighbourhood is a sure way to maximise your return on investment. As they say – location, location, location – here is how to spot the right neighbourhood for your investment.
We would advise that before you do anything, you should have a consultation with a real estate advisor – just like you would consult with a financial advisor before investing a large sum of money. This consultation will undoubtedly help prospective property investors make an informed decision about the suburb that they are thinking about investing in. These professionals can also keep you abreast of real-time property sales per square metre pricing, rental yields, number of days on market, and % of selling price to asking price
Building a relationship with a knowledgeable real estate agent in the area will also help you stay ahead of the trends and needs of buyers while allowing you to have the inside scoop of other investment opportunities in neighbouring suburbs.
How do you spot that up-and-coming suburb?
While there are many factors to take into account when investing in property, below are the top three tips on how to spot a suburb on the rise.
Rental prices increase
Rental returns are always a good indicator of demand to live in a suburb. A good sign is that rental prices in a suburb start increasing in value. This is a demand signal that often results from buildings having been upgraded and landlords having invested into their properties. Alternatively, an increase in rental demand could be as a result of tenants moving into the area because it is cheaper than an area that is more established. Soon, this demand will drive up prices and the suburb will become more established over time.
Keep your eye on spill-over areas
It is quite common to have up-and-coming neighbourhoods act as spill-over areas for existing in-demand suburbs. These communities are just outside where all the growth is happening. Property prices are usually more affordable in these areas but are still within close proximity to all the action of the established suburb. Over time, homeowners invest and renovate older properties and the spill-over suburb catches up in value as demand keeps growing.
Schools and shopping centres signal demand
Watch out for new schools and shopping centres as these are sure signs of future suburb growth and ultimately price appreciation. Renovations or upgrades to existing schools and shopping centres could also stand to increase the appeal of the suburb and bolster property values.
What are the red flags for neighbourhoods in decline?
If a neighbourhood is seeing a decrease in rental prices or an increase in vacancies, it is a sure sign that demand is dwindling. Keep your eyes on any municipal planning changes that could see industrial or commercial zones start invading residential spaces. How does the suburb look in general? When municipalities neglect basic services depreciation can happen fairly quickly, so keep an eye out for municipal parks and common spaces looking over-grown and piling up with litter.
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