Property professionals don’t waste hours deliberating over every suburb before deciding whether it’s worth a closer look in Australia’s super competitive housing market. In reality, seasoned buyer’s agents rely on a solid process that lets them knock out unworkable locations in a matter of minutes. Their choices are based on actual numbers rather than hearsay from locals or whatever the market is talking about. We’re talking about data from the likes of CoreLogic, the Australian Bureau of Statistics (ABS), SQM Research, state planning peeps and stuff like rental databases. Not speculation, but real key indicators get pored over, housing stock levels, vacancy rates, demographic changes, who’s buying and selling, affordability, and what’s driving the market right now. This way of doing things gives them a quick and easy way to pinpoint suburbs that should be a solid bet for the long haul and some future growth.
The First Five Minutes: Working Out if a Suburb is on the Up or Down
First things first, buyer agents take a look at the balance between homes available to buy and how many buyers are out there looking to buy. They start by reviewing the number of homes up for sale, new listings coming onto the market, and rental vacancy rates because these are often the first signs of a changing market before prices start to respond. Low vacancy rates suggest that there’s strong rental demand and not enough homes to go around. Australia-wide, a vacancy rate of under 2% is generally seen as a sign of a tight rental market. If it’s under 1% then it’s basically a disaster. Listings of new homes coming onto the market get equal attention. If there are barely any new homes available and the local population is still growing, it’s more likely that house prices are going to go up and up. Buyers’ agents are always on the lookout for areas that have a clear oversupply of homes, especially those with loads of big apartment developments or a heap of new homes being built. If they see any of that, they can quickly knock that suburb off the list. It’s just not worth their time.
The Next Five Minutes: Working Out What’s Going On With Property Prices
The next stage is looking at where prices have been over the past year or so to see if there’s a broader trend. Essentially, a good buyers agent Melbourne, whether it’s in Melbourne or anywhere else, is going to be looking at how prices have changed over the past year, 5 years or so, and whether the market is starting to slow down or speed up. Australia’s property market is valued at a whopping AUD 10 trillion. It’s no wonder that identifying suburbs with the strongest long-term growth potential is going to involve doing some trend analysis. Rather than looking at suburbs that have just had a big hike in prices, good buyers’ agents will often be looking at suburbs that are just starting to get going in a new growth cycle because that’s where the really profitable opportunities lie. Research actually suggests that being in early is often the way to go. You can outperform all the other suburbs that are just getting more and more overcrowded.
Minutes Ten to Fifteen: Getting a Grasp on Liquidity Through Sales Activity
Property market liquidity is a pretty good indicator of how easy it is for houses to be bought and sold within a suburb. Buyers’ agents get a feel for this by taking a close look at how many properties are selling, how quickly people are buying up new homes and how long it takes to sell a place. Generally, if homes are selling fast, it means there’s strong demand from buyers and a lot of competition.
Minutes Fifteen to Twenty: Taking a Look at Demographic & Socioeconomic Trends
Next up, we shift our attention to the people who live in the suburb. We can get access to all sorts of detailed data through the ABS Census. This covers stuff like household income, education, employment, population growth and how many owner-occupiers and investors there are in the area.
Minutes Twenty to Twenty Five: Reviewing the Infrastructure & Development Pipeline
The final stage is to take a look at what’s happening with infrastructure and development in the area. This is stuff that could have an impact on long-term property demand. Buyers’ agents will quickly take a look at planned transport upgrades, hospital expansions, new university projects, employment precincts and other major developments that are either happening or are planned to happen in or around the suburb.
