I will always advocate that ‘good property investors don’t just buy property, they buy TIME!’
However, whilst we are in the ‘accumulation phase’ of our investment journey, we also need our properties to go up in value as soon as possible, to keep growing our portfolio. That means we need to carefully select the location of our investment properties so the property goes up in value relatively quickly. This will allow to grab the available equity and use that as the deposit and all costs for our next property.
The key is ‘how to choose the investment location’. This is undoubtedly the most important decision that you will make.
We cannot afford to get this wrong and that is why Axon Property Group invests more than 100hrs investigating EVERY location that we recommend our clients invest in. This ensures that the location measures up against the ‘7 ingredients to a health property market’.
Ultimately, this is all about SUPPLY & DEMAND. If supply is higher than demand, there is going to be upward pressures on house process. This is basis of all economics. So… what attributes drive this demand higher
Families want a great level of schooling, nearby. There needs to be everything from little mini-child care centres all the way up to tertiary level education; with a good mix of private & state schools for both primary and secondary schooling, colleges and universities.
We are not talking about little medical practices with a GP on the corner! We need massive public and private hospital precincts and/or large-scale specialist medical centres. if these are within a few kilometres of your investment – your tenant will critical services right at their doorstep, which is seen as essential for high demand! Also, health care is the biggest employment industry in Australia; so all of these people need places to live, right?!
Shopping / Retail
The second largest employment industry in Australia is retail – again, these people need somewhere to live close to their employment. We don’t even look at the little convenience store on the corner as retail though – we do it on the big scale. As an example, look at one of the area’s we’ve got access to at the moment. You’ve got access to Costco, IKEA, a massive Westfield Shopping Centre and one of Australia’s largest Bunnings. And it’s all within a location where the land is pretty much all gone now. The last little bit of it’s just being developed and snapped up now. When supply reaches zero and demand continues to grow in that area (especially with a brand-new train line!!); you watch what happens – property prices will rise!
We are looking at a few aspects here – high speed road corridors and access to major public transport nodes. According to Terry Rider, the largest infrastructure project for upward pressure on property prices is a new train line. So if we combine a well-connected train line, great access to highways; supported by great public transport systems, it gives us a great chance for property prices to increase. It’s even more exacerbated if the new train line runs express services to the CBD in the morning and afternoon!
Most other blogs you’ll read will list the above; they are the staples of good property investment location selection. However, combining these staples with the 3 remaining ingredients, will be the biggest kicker when it comes to gaining the best results.
So we have our staples identified… but what sets aside the most premium areas? The things that make a community – Master Planned Communities have sporting fields, parks, curated bike and walking paths, nature trails and playground facilities all built in – this makes your investment property a very attractive place to live! If people want to live there, demand will stay high – driving prices up!
Increasing population growth
This can’t just be normal growth… This needs to be far higher than the normal growth rates when compared to the state and national averages! If an area is only expecting 8-9% growth, the demand can be easily met. We need to get somewhere that demonstrates population growth will be sustained far higher for the next 20-30 years!
Diminishing Land Availability
If there are small farms and open fields as far as the eye can see – just waiting to be bought and developed, the land supply vs demand equation will never be in your favour! Being able to source premium properties in smaller, boutique developments will yield much better result!
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Overall, if there are thousands and thousands of people working in these areas to make sure education, medical, retail and transport facilities are as high quality as they can; then it is going to place upward pressure on housing market.
But we don’t settle for four, five or six, or anything lower. When you get all seven of those working for you or if you’ve got access to Government level research, data, and trends, you can go and buy with confidence that you have selected the right area.