There are many things to consider when assessing the potential of an investment property, including where to buy. The media may report on the ‘Australian Property Market’ as a single entity, however, Australia consists of thousands of property markets, doing different things, at different times.
There are various national economic factors such as consumer confidence, interest rates, unemployment and wage growth that influence the markets at large, however, there are many other drivers such as supply levels and affordability that can make an individual market move in its own cycle.
Sound Property has developed an innovative research model that involves a ‘top-down’ approach across three tiers of research. The 15 Key Investment Drivers identify the best markets and property for growth and rental yield, and help reduce risk.
In Australia, there are literally thousands of different property markets that have historically performed in 7-10 year cycles of boom and bust, or expansion and contraction. As the market expands and prices rise, new supply is constructed to a point where the market becomes saturated and starts to contract and the process repeats.
How does this impact property?
To accelerate results in property investment, it is best to get into a market at the bottom of its cycle. When supply levels are low and demand is triggered by factors such as low interest rates, affordable housing or increasing confidence in the market. This is the philosophy of counter-cyclical investing, or ‘showing greed when others show fear and fear when other show greed’ as Warren Buffett would say.
Where to find more information?
It is important when looking at market cycles to use a large window of time, such as 10 years plus, not a week, month or year as some media reports on. This data can be found for each suburb around the country on licensed websites such as pricefinder.com.au
Although market cycles are a key investment driver in the property market, they should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
On an international scale, Australia’s average unemployment is actually relatively low, currently sitting around 5%. Unemployment rates can be more volatile and concerning in markets that rely on a small base of industry and commerce, such as mining towns or lower socio-economic areas.
How does this impact property?
If the unemployment rate is high the local population may not have sufficient income to pay rent or support price growth in an area. This can obviously negatively impact the performance of an investment property.
Where to find more infomation?
The ABS release employment data after every census and information can be found on their website www.abs.gov.au. Another great website is profile.id.com.au
Although unemployment is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
The basic economic principle of supply and demand is a fundamental property market as a driver of growth and rental yields. Excess demand and lack of supply will result in lower vacancies and upward movement in prices and rental yields. Excess supply will do the opposite. Demand can be triggered by such factors as low interest rates, wage growth, employment and infrastructure spending. How does this impact property?
It is important to look at future supply levels and how they may impact the market. Be especially cautious in areas with higher density housing and less height restrictions as these areas can be more volatile and become oversupplied quickly. Similarly, ‘greenfield’ estates on the edge of the suburban sprawl where there is no scarcity of land can be developed faster than the actual demand.
Where to find more infomation?
Local council – New approvals for supply
sqmresearch.com.au -Stock on Market, Vacancy Rates
Although Supply and Demand is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
An increasing population is reflected in a positive growth rate for an defined area. This influx of people may be coming from interstate migration or external immigration. Traditionally the national growth rate is around 1-2% p.a. Fast growing areas may have 3%+ p.a.
How does this impact property?
Population growth puts pressure on the demand side of the property equation. It may also signify the health of the local economy, job market, affordability and desirability.
Where to find more infomation?
Population data can be found in a variety of places such as the ABS or a great website, profile.id.com.au.
Although population growth is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
The health and growth of an economy can be measured by Gross Domestic Product (GDP) or Gross State Product (GSP). These are basically the market value of goods and services produced by a country or state, and their trends over time.
How does this impact property?
Economic vibrancy is one of the main determinants of standard of living and societal welfare. If an area has a healthy economy and increasing output this can creates more jobs and wealth which has a positive impact on property market and demand.
Where to find more information?
CommSec produce a great monthly report called the ‘State of the States’ which has a diverse range of economic data from a variety of sources and is just one useful insight into the economic ranking of each State and Territory.
Although economic strength is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Infrastructure projects such as roads, rail, schools, hospitals and shops.. and even casinos are an important driver in the property market. They can be initiated and undertaken by private and public companies, councils and governments.
How does this impact property?
These new projects can create and support urban renewal and gentrification, attracting new generations of people to an area. They also create employment opportunities which are vital to the local economy. This influx of population can place pressure on the demand of housing, resulting in positive appreciation of prices and increased rents.
Where to find more infomation?
Local council or government websites. Local newspapers and print.
Although Infrastructure is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Vacancy rates are an extremely useful measurement of the relationship between the supply and demand of an area. The vacancy rate is basically the available rental properties on the market at any one time divided by the total rental stock in the area.
How does this impact property?
When vacancy rates are low it usually means supply is being outstripped by demand. This puts upwards pressure on rents and prices then tend to follow. Generally, a market is considered balanced at 3% and anything less is an undersupply. A vacancy rate of 3% an investor could expect around 1-2 weeks vacancy a year.
Where to find more information?
Although Vacancy Rates are a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Affordability is the relationship between average household incomes and average mortgage repayments, or more specifically what percentage of income is being spent on mortgage repayments.
How does this impact property?
The more people pay out their income towards a mortgage, the less ability they have to keep pushing prices upwards. Ideally, below 30% of household income going towards mortgages represents a comfortable market with room for growth.
Where to find more information?
Data can be drawn from the ABS Census to determine this debt ratio in each market and suburb.
Although affordability is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Demographics include average incomes, average age, transport to work, household structure, crime rates and employment.
How does this impact property?
It is useful to understand demographics such as the type of household structure and socio status to invest in the right type of dwelling for the area. For example, it would not be advisable to buy a one-bedroom unit in an outer suburb known for families that desire houses. It will lack demand and subsequent growth. Always look for features that will attract local owner occupiers as this is the group pushing future values up.
Where to find more infomation?
Demographic data can be found in a variety of places such as the ABS or a great website, profile.id.com.au.
Although demographics is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Sales data includes statistics such as auction clearance rates, stock on market, days on market and online listing views. It show the amount and the frequency of transactions in a market.
How does this impact property?
Sales data can be used to determine the health of a market. For instance, if the ‘days on market’ are long it may suggest a sluggish market with low demand. This impacts the sale prices achieved and in turn the price growth of the market.
Where to find more infomation?
Sales data can be found on websites such as realestate.com.au and sqmresearch.com.au
Although sales data is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
The build quality, condition and age are important considerations when investing.
How does this impact property?
Although no building is 100% free of defects it is important to put them into perspective and gauge if any upkeep or ongoing maintenance is required. Conducting a pre-purchase building and pest inspection is a vital part of the due diligence process.
Where to find more infomation?
A licensed building inspector should summarise the occurrence and condition of defects in a report for you to make an informed decision and minimise unexpected future expenses.
Although build quality is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
There is a saying in real estate that you make your money when you buy, or paying the right price is crucial to the success of the investment. The other piece of the puzzle is achieving a steady rental income that fits your budget.
How does this impact property?
Paying too much for a property can take years to recoup. However, offering too little could mean you miss out on a great investment all together. Buying a property that has a low yield can quickly become a burden to hold and may result in a forced sale if interest rates rise.
Where to find more infomation?
Find sales and rental evidence to support the purchase price and predicted rental yield. These comparables should come from within the last 6 months, be within a 1km radius, and be a fair comparison in terms of size, features and inclusions.
Although price and rental yields are a key investment driver in the property market, they should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Size relates to various measurements such as land size, house size, bedroom size, living size and general useable space.
How does this impact property?
It must match the demographic for the area, for example, a family needing space vs a young professional couple that are happy to live in smaller quarters.
Where to find more infomation?
Floorplans, council records and planning websites
Although size is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Property features such as views, design, architecture, extra car spaces, large outdoor areas, air-conditioning and north facing are all bonuses when it comes to finding standout investment properties.
How does this impact property?
For property to achieve high demand when being sold it needs to be attractive to the local demographic. Therefore when purchasing look for features and owner occupier is going to be interested in. Avoid investor-only areas with cookie cutter designs and poor quality finishes as these won’t stand the test of time or produce the best returns.
Where to find more infomation?
Speak with local agents to ascertain what is popular and in demand in the area. sqmresearch.com.au will also show the ratio of investors vs owner occupiers in a suburb.
Although property features are a key investment driver in the property market, they should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Location, Location, Location is the old adage that well placed real estate will be in demand and ensure future growth.
How does this impact property?
It is vitally important to have basic amenities nearby, such as shops, schools, transport and hospitals. Popular school catchment areas can also positively affect prices, as families try to secure the best education for their children. Unfavorable locations, such as flood zones and busy roads, should be avoided as they can impact the potential resale of the investment.
Where to find more infomation?
Walkscore, Google Maps, Suburb Scores and local School catchments can all provide valuable infomation on the location of a property.
Although location is a key investment driver in the property market, it should never be looked at in isolation. Research of other drivers may reveal vital facts and trends that need to be taken into consideration for a sound investment. Stay tuned as we highlight other important drivers, and how to research them.
Sound Property’s Suburb Profile Reports provide the key facts on any suburb in Australia, from a variety of trusted sources, to identify the best markets for growth and rental yields and help avoid costly mistakes.
Download a Sample Report
Expats investor looking for a property that offers both strong rental yield and significant growth potential.
Duplex with modern finishes located within minutes to all local services, amenities and parkland. Being a duplex, this property has no body corporate or strata fee.
Modern & low maintenance 3+ bedroom home with future development potential
Beautifully renovated home located on a premium family-orientated street. Opportunity to hold as a rental or to subdivide into two blocks of land.
3 bed 2 bath home in a family-friendly suburb while providing excellent rental demand.
Neat and well maintained low set brick home located near local parks and school in a hotly contested rental market.
Low maintenance house, preferably closer to the CBD.
Modern and spacious family home that benefits from strong growth potential with future subdivision potential.
SMSF purchase requiring a set and forget property with a strong yield. Preferring some degree of renovations ensuring no work is needing to be done for the foreseeable future.
Highly desirable area, family friendly, low vacancy rates with lots of competition for potential tenants, higher yielding area, low maintenance property perfect for a SMSF.
Low maintenance set and forget investment property, preferably a house.
Well-maintained property with updated modern appeal, achieving a strong 4% yield in a historically high-growth suburb.
Looking for a low-maintenance, preferably a 3+ bedroom house, with 4% rental yield.
Low maintenance brick home, had partial renovations, on a good size regular block and wide frontage.
A SMSF requiring a renovated low-maintenance set and forget property.
Low maintenance brick home in a hotly contested rental market, potential to value add in the future with strong rental return.
Low maintenance property with strong long-term growth potential and the added benefit of land subdivision opportunities.
An off-market opportunity allowed us to secure a low maintenance property well below market value. Located close to CBD, airport and hospitals.
Low maintenance set and forget investment property, preferably a house.
An off-market opportunity allowed us to secure a renovated property well below market value. The recent renovations reduce the likelihood of future maintenance, ensuring peace of mind for the owner. A true win for our strategic investor.
Repeat client engaged Sound Property to manage and deliver profit on the development of two high-end homes in a blue-chip suburb.
Located across the road from a popular park, the original house sat on 2 lots for an easy knock-down rebuild project. Sourced, managed, and delivered by the Sound team for our time-poor client.
Repeat client seeking a fixer-upper in a family-friendly suburb. Add-value through renovations and extra floor plan.
This former, run down 3-bedroom house was a prime renovation opportunity - great bones and scope to add value.
Looking for a low-maintenance property with a yield of 4.2% or more.
Located in a desirable neighbourhood with a low vacancy rate of 0.8% and strong 7.55%p.a. long term growth. The recent renovations, lower the likelihood of any maintenance required.
Our most lucrative investment strategy for an investor looking for a more 'active' strategy than our usual 'buy and hold' buyer's agency work.
Sourced, secured, managed and delivered by the team at Sound Property for our time poor business owner.
Repeat client engaged Sound Property to manage and deliver profit on the development of two high-end homes in a blue-chip suburb.
Located at the high point of a prestigious street, the original house sat on 2 lots for an easy knock-down rebuild project. Sourced, managed, and delivered by the Sound team for our time-poor client.
High-yielding & low maintenance investment property.
Neat and well maintained low set brick home located near local ammenities in a hotly contested rental market with a strong 7.88%p.a. long term growth.
A property offering a well-maintained family home on a large block with subdivision potential. Providing a solid foundation for future growth and development flexibility.
Modern and spacious family home that benefits from strong growth potential and subdivision-ready zoning. The low vacancy rate, along with the area’s steady demand, enhances its long-term value as both an income-generating asset and a capital growth opportunity.
Low maintenance investment property located in a sought-after family suburb with a proven track record of strong capital growth.
Located conveniently close to the train station, shops, schools. This suburb's exceptionally low vacancy rate of 0.8% and long-term growth rate of 9.42% per annum suggests the potential for substantial appreciation in value over time.
Low maintenance house with a minimum yield requirement of 4.5%+.
What we liked: Recently renovated interiors meant strong tenant interest. Located in a suburb with strong 8.33%p.a. long term growth and a high 5% yield made this a well-rounded investment.
A well-maintained property with scope for adding value and potential subdivision STCA.
Neat and well maintained low set brick home in a quiet cul-de-sac area. Scope to add a 4th bedroom and subdivide in future.
Modern & low maintenance house with a minimum yield requirement of 4.2%+.
This property perfectly suited the client's brief, including a yield requirement of 4.2% +. With tenants already secured for the entirety of 2024, it presented an excellent opportunity with rental income assured.
An opportunity for both steady rental income and long-term capital growth.
Family-friendly home located close to shops, schools, medical centres, and other essential amenities. Recent rental appraisal of $650/pw indicated strong rental growth potentials.
Buying their first investment property, our client's focus was a strong yield to offset mortgage repayments.
Rented before settlement for $40 per week higher than the initial appraisal. The modern kitchen & bathrooms enhanced the property's rental appeal.
The instructions from this client's Financial Planner was clear - Capital Growth!
Mission accomplished by securing this large double block with future subdivision potential, in only 2 weeks from engagement.
House with a strong holding income that can be subdivided into 2 or more blocks in the coming decade.
Well-kept family home with strong rental income. The property can be redeveloped into 3 x 405 sqm lots or 2 x 607 sqm lots whilst retaining the existing house.
Investor looking for a low-maintenance investment property in Melbourne's South East.
A low-maintenance investment in a blue-chip suburb that has a proven history of growth
An entry-level investment property located near a major infrastructure precinct.
Located around the corner from a major Westfield in a hotly contested rental market - low vacancy rates & proven history of growth above 9% p.a.
Affordable first investment with strong yield to help offset holding costs.
Rented pre-settlement meaning there was a strong holding income from day one! Low maintenance investment in a boutique TH complex.
High-yielding & low maintenance investment property
Strong 5.4% yield and rented $20 over the initial rental appraisal.
Landbank with future subdivision potential
Huge block of land with the ability to subdivide into two well-sized building blocks.
Low maintenance investment property with strong yield & growth potential
Spectacular result for our client. Achieving a capital growth rate 18.2% in just one year, well above market averages.
A rentable family home to hold for 10 years before subdividing and developing into two homes
Beautifully renovated home located on a premium family-orientated street. Opportunity to hold as a rental or to subdivide into two blocks of land.
Looking for a low-maintenance purchase with a yield of 4.5% or more, preferably a 4+ bedroom house.
The strong rental yield, spacious layout and the potential for long-term growth supported by low vacancy rates from a predominantly owner-occupied suburb.
Well-balanced investment of growth and rental yield +4.5% for SMSF
Using an SMSF to buy property can be a powerful wealth creation strategy, however, can come with more complexity than other property investments.
Diversify NSW + QLD portfolio with a low maintenance investment
A proven performing suburb with a long-term growth rate of 8.36% p.a
Affordable investment property with high yield to help offset mortgage repayments
Great result for a client that's used the strategy of 'equity in their home for investment'. A property so clean there were no items to be rectified after the building and pest inspection!
Landbank opportunity with development potential in future
Rare and affordable 3-lot infill subdivision only 20km to Brisbane CBD.
Owner-occupier looking to buy a unique and quirky apartment to reside in while in Melbourne.
Character-filled 2-bedroom apartment close to the CBD, perfect to call home. Opportunity to lease in the future and benefit from the strong yield.
Low maintenance, multi-tenanted commercial property in a proven market
Massive freehold Highway corner site in an important inland city. High quality medical and pet care investment with long secure leases. Thriving, established dental tenants with recent fit-out.
Custom Built House in blue ribbon address
Short walk to public transport and popular schooling in a proven suburb for long-term growth. ~$41,000 in depreciation benefits in year 1 alone.
Vacation home in an exclusive waterfront position, with rental opportunity
A perfect lifestyle investment, compounding an annual growth rate of 22.4% since purchase. Adding up to a phenomenal gain of $1.2m.
Townhouse around $500K budget, with strong growth and high rental yield
This boutique block of only 9 x 2 + 3 Bed townhouses, 7km to a thriving CBD, were great value around the $500k mark with strong rental yields at 4.7%. The owner-occupier focus and quality of these townhouses will ensure high growth and rental demand for many years to come.
Inner city house for investment and relocation
Recently renovated and super convenient location
Custom Built House in blue ribbon address
What’s not to like about a piece of blue-chip real estate with a strong rental yield?! Only 6km CBD, walk to the train, surrounded by the top private and public schools. Tick, tick tick!
Rentvestor looking to diversify their portfolio into new markets having already bought properties in Sydney and Brisbane.
Property outperformed the market average growth rate and continues to acheive tight vacancy rates, all at an affordable price point.
Custom Built House in blue ribbon address
Another custom build comes to completion for our time-poor client. Fully sourced, managed, and delivered by the team at Sound Property®. At the long-term growth rate (past 25 years), this property is set to double in value over the next 7 years
Brand new home with full depreciation benefits to help offset income.
The strong market fundamentals. This suburb's exceptionally low vacancy rate of 0.6% indicates high demand for rental properties, while the long-term growth rate of 10.28% per annum suggests the potential for substantial appreciation in value over time.
2 x Custom Built Houses in blue ribbon address
183% return on client’s funds in 24 months = $1m gross profit before tax. On top of this great result, the client will now benefit from $2,500/w in combined rental income (5.2% yield), making the investment positive cashflow as it grows further in value.
Overseas investor wanting affordable investment property without compromising on location, budget under $600K.
This investment ticked all the right boxes, with suburb achieving consistent capital growth in the last 15 years. The property features and location are attractive to renters, which ensure a good rental return. Since this was a brand new property, tax deductions were also maximised.
Custom Built knockdown/rebuild
Another custom build comes to completion for our time-poor client. Fully sourced, managed, and delivered by the team at Sound Property®. At the long-term growth rate (past 25 years), this property is set to double in value over the next 7 years.
2 x Custom Built House and Land in blue ribbon address
Nestled on the side of a hill with sweeping district views. These houses feature a seperate self-contained unit downstairs. Only 6km to the CBD in a blue ribbon postcode with solid long-term growth.
Premium Custom Built House and Land in high demand suburb
Only 6km to the CBD, this blue-ribbon address in a high demand suburb has been consistently achieving 11% capital growth p.a for the past 15 years. Clients made some solid inbuilt equity by the time the property was complete and will prove a strong long-term buy and hold
Custom Built knockdown/rebuild in blue ribbon address
Another custom build comes to completion for our time-poor client. Fully sourced, managed, and delivered by the team at Sound Property®. At the long-term growth rate (past 25 years), this property is set to double in value over the next 7 years.
Premium Custom Built House and Land in high demand suburb
Exhibit A and B – Helping to grow wealth through strategic property investments. Perched at the top of a hill overlooking the water, CBD, and mountain ranges. Looking back less than two years this raw land was a bargain.. at the time it was the record price for the suburb!
Low risk, blue chip, buy and hold house and land in desirable community
A blue ribbon, affluent demographic on the Sunshine Coast. Extremely tight vacancy rates, strong rentals and booming infrastructure projects make this a solid buy and hold.
Investor with 2 units on the Gold Coast and 2 houses in Perth wanting to assess risk in current portfolio and unlock equity to continue investing.
This client had an established portfolio; however, it was limited to two markets that have a track record of being volatile. A Portfolio Review highlighted location risk and performance issues based on some of our 15 Key Investment Drivers. This objective analysis allowed the investor to take action and safely grow their portfolio.
Have one of our Property Advisors call you to discuss getting started.
