1. How much demand is there?

What a lot of people don’t realise is that capital growth in property, is very simply explained. This explanation can be used for almost any other asset that you wish to invest in. If you have a strong demand for a particular product (in this case property in a particular area) plus you have an under-supply of that product (once again, in this case property in a particular area). It is guaranteed that your price will increase. Therefore, you need to know how much demand is in that area. Increasing demand for property is increasing population. So track your population figures for an area.

2. How much supply is available in the area?

You can have all the demand in the world for a particular area but if supply is exceeding demand then prices won’t rise very fast. You want to know how many new estates are coming on in an area. That is really the only way that supply can be increased. You also want to check how many other houses are for sale in that area. That will also influence growth.

3. What will the property rent for?

The key with holding a large property portfolio is maximising your cash inflows. This comes from things like depreciation on new property but more obviously rent. How much your property will rent for is going to have a major influence on your cash flows so not only listen to what the agent says but also do a bit of your own research to back those figures up.

 

4. Where will people work?

People need to work to be able to survive. People will move away from an area if the work dries up. Therefore, I highly advise clients to steer clear of regional markets that rely on one source of work – such as mining or tourism. You need to be in a market where there are multiple employment streams. Generally that means within a reasonable distance to the capital city of the state. How close you get to the CBD is going to vary on your budget.

 

5. What infrastructure is close?

Infrastructure is what is going to make a place attractive to people. It will make people want to live there. Things you need to know are:

· Where are the schools in the area?

· Where is the transport?

· What is the road access like?

· Where are the shops?

· Where are the jobs?

· Where is the recreation?