Buying an investment property is an exciting yet challenging process. With high competition in today’s Australian property market, proper due diligence is essential to avoid costly mistakes. Performing comprehensive market research should be your top priority before purchasing a property, especially in cities like Melbourne. This article outlines key strategies for researching an area and neighbourhood to identify sound investments.
Dive Deep Into Market Metrics
Look well beyond headlines to understand the full market story. Review median prices over the past 5-10 years to identify growth patterns. Study sales volumes to see if price changes link to supply and demand shifts. Granular data by property type uncovers subtle trends. For example, house values rising while units sink points to oversupplied units. A property valuation Melbourne report can provide in-depth pricing data.
Drive the Local Streets
Start by touring the target suburb yourself to observe conditions first-hand. Drive all the residential streets, noting home maintenance, gardens, parked cars, and any visible issues. Look for “For Sale” signs to gauge listing volume. Check for gated neighbourhoods, which may indicate security concerns. However, gates can also create an upscale impression in nicer areas. Get a feel for the general vibe and pride of ownership.
Evaluate the Main Retail Strip
Visit the main shopping street on both weekday and weekends. Are shops bustling or empty? Closed stores with faded “For Lease” signs are a red flag. Conversely, busy cafes, open restaurants, and crowded sidewalks suggest an energetic local economy. Try both daytime and evenings for the full perspective. You want a lively mixed-use environment.
Consult Local Property Managers
Contact area property managers to tap their insights. Inquire about tenant types, rental demand, average stay, and vacancy rates. A long waitlist and low vacancy suggests strong renter interest. High turnover and many vacancies indicates weaker demand. Also ask how quickly units lease after tenants leave. Fast turnover indicates tight supply.
Research Development Potential
Check for vacant land or incomplete roads that signal future growth. Note any vacant shops or run-down buildings ripe for redevelopment. Empty fields or aging structures allow higher-density housing that can impact supply/demand balance. Drive around and research approved projects to gauge the pipeline. Too much new stock flooding the market quickly drives down prices.
Dig Into Demographic Trends
Analyse recent population and job growth to see economic conditions. Compare to state and national benchmarks to spot areas outpacing or lagging the broader market. Expanding populations and employment signal solid fundamentals. Declining figures suggest weaker conditions unless linked to temporary factors like mining fluctuations. Know both historical trends and forecasts.
In summary, thorough research from multiple angles provides the complete picture needed to assess investment potential. Relying on defaults or assumptions leaves you vulnerable to unseen risks and missed opportunities. The upfront effort of comprehensive due diligence pays off many times over in guiding sound decisions. Leave no stone unturned to maximize your chance of investing success.