Often times when you are considering purchasing a new property, you are looking in areas that you may know a little about, but how do you truly assess a property in an unfamiliar suburb?
We may have preferred a certain suburb, but the price has got too expensive or the demographics may have changed and made our first choice no longer our preferred location. Maybe your job changed and necessitates relocation to an area that better suits our changing lifestyle and family needs.
So, what are some of the ways to fully understand a new area and determine if it’s a place you could call home?
The first question is probably the simplest
Can I afford to buy in this suburb?
We all have a budget that we have to work within. The best way to fully understand this is to obtain a pre-approval for your loan, this will give you a clearer idea about your spending limit as you start your property search.
Nowadays it can be a little difficult to find out what prices are in different suburbs. Auctions, listed without a price or a price range all make it tricky to really understand what houses are actually selling for in a region.
A good idea is to look at the recent sales for a suburb, this is the real prices that people are paying for a house in this area. You will still need to factor in the direction that the market is moving, but this will give you a good idea.
The other thing that needs to be considered here is the actual demand. How many people are turning up for an open home? Lots would indicate that the demand may be increasing, which could lead to higher prices.
Browsing sold listings will give you an idea of prices and buyer demand in the area, while there are other forms of information like the Domain’s quarterly House Price Reports which can reveal how much prices have changed over the past quarter and year.
When doing this research it is also important to compare apples with apples. So look for similar properties: the same location, the same or similar suburb, similar-sized blocks of land, similar-sized houses, the same number of bedrooms, and houses in similar condition.
A rough guide is in a steady market, recent sales will indicate what you can expect to pay, however, in a heated market you may need to add up to five or 10 percent and in a declining market subtract five or 10 percent for more accurate pricing of new listings.
Get out and visit in person
The previous research will help you to decide what areas to start looking in, but now it is time to actually get out an about in the suburbs.
Some of the things to look for here are where are things located, shops, public transport, schools, cafes, and parks, all the things that add to our lifestyle.
But you should also be on the lookout for things that may be less than desirable. These could include, graffiti, burn-out tyre marks on the road, large overhead electricity lines, and neglected or run-down, bus shelters or shopping precincts, cemeteries or industrial areas. All of these could be reasons to avoid a suburb or look for a location in a better part of the area.
A single suburb can play host to a smorgasbord of people and property, so you’ll want to get an understanding of the best and worst pockets.
Even though a suburb may be a little run down or not appealing if you are buying as an investment there could still be many reasons that you consider the area. Maybe the neighbouring suburb has been growing quickly, or there may be major redevelopment plans for the area. You could even start to see the effect of “gentrification” starting with houses being renovated or simply knocked down with better new houses being built.
You will only get to see some of these things by getting out on the ground in the targeted suburbs.
Explore the fundamentals
The Australian Bureau of Statistics website has a wealth of information on every Australian suburb from the age, education, and income of residents to population growth, dwelling types, and the breakdown of owner-occupied versus rented property.
This is a good way to get familiar with the local demographic.
You can also view suburb profiles on Domain or Realestate.com.au, check council websites for information on new developments and planned infrastructure projects, and visit state-based websites for crime statistics.
Crunch the data
Unless it’s to be your forever home, buyers should also keep resale value in mind before they buy.
It’s critical that if you don’t want your first home to be your final home you need to focus on capital growth drivers. Things like new infrastructure, more employment improving economy etc. This will mean that if your property is rising at a faster rate than other areas, you will be able to move into an upgraded property in the future.
If you plan to rent the property out after a period of being an owner-occupier, you’ll also want to get familiar with the suburb’s rental prospects. Buyers should also take into account the ratio of owner-occupiers versus renters, the vacancy rates, and the rental returns that will all impact the viability of holding onto the property as an investment.
Ask an expert
Even doing all the research there is information that a good local real estate agent will know about an area. The things that are happening, but just haven’t been reported as yet. So if you are looking for guidance about your next property investment, you can speak with David Watt our Investor Support Service officer who can highlight the pros and cons of different options for you.
You can reach David on 0468 633 493
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Hicks Real Estate Team
Hicks Real Estate is a Brisbane based, full-service real estate agency supporting buyers and sell as well as renters and property investors. With almost 20 years experience in the local market, we are the real estate experts you can rely upon.
