You’ve made the decision that property investment is something you would like to pursue. You’ve had a good look at all the states, and which cities appeal to you.
From that, you evaluate the different suburbs and discover some great properties which could be the perfect investment property for you.
But how did you arrive at that decision in the first place?
When we start evaluating which investment property is a good one, there are so many things you need to think about from the big picture all the way down to your own personal situation. Here are the three biggest macro-economic factors to consider.
New South Wales has seen a negative growth in Net Interstate Migration during the last decade, with an average loss of residents numbering just over 16,000. Despite this, net overseas migration has created a net gain of 59,000 new residents in 2015 alone. While there are more people, many of these new arrivals lack the wealth to buy or rent the most profitable real estate. People looking to invest in real estate are usually looking outside Sydney.
You want to be looking at where the people are moving. High net increases in migration numbers generally mean it’s a hot market for buying investment properties, but not always. Many new arrivals simply don’t have the resources to move into the kind of properties investors are looking to buy. Even then, investing in the best properties won’t give good returns if the usual renters have left town.
The more people that live in an area, the more wear and tear they put on all the roads and bridges that connect everything together. It’s like the carpet in the front office. The busier it is, the more often it has to be cleaned and eventually replaced. This affects investment properties in two ways.
If infrastructure is ignored, the result can mean a decline in people wanting to move in to a given area. No one wants to live in the run down part of town. While Sydney is going through what many are calling an infrastructure boom. It sounds good but many of these problems are things that have been put off for the better part of a decade that will take more time to fix than most officials are willing to admit. Bottom line, it’s a long term problem without an easy solution.
When the infrastructure is well maintained it also lends to big business investing in the area which in turn also helps with local employment and a wider range of goods and services being made available for people that live there.
Australia has a varied economy, but each city or territory has its own piece of the economic pie that is mostly theirs. Despite what TV shows and popular media may have told our foreign investor friends, Australia is more than Sydney and a big empty swath of Outback. Places, such as Newcastle, have achieved considerable progress in gaining greater economic diversification. Whilst Newcastle has traditionally been tied to mining activities, service industries such as education, healthcare and business support services, are taking over – and understanding the implications inherent in these changes is important.
The key thing is to look at the long term viability for economic factors, before buying an investment property. Industries will always have their ups and downs, but will they still be around, or relevant in five, ten, or twenty years? No one can predict the future, but getting advice from property and financial industry specialists will help to inform the purchase decision.
Also, keep in mind the impact new and emerging technology and industries might have, on an investment decision. We all know what e-mail did to the Australian Post Office! Google revealed in August 2014 that it had been testing delivery drones (UAVs) in Australia for two years. Many experts predict that 3D printing and delivery drones could have the same impact on shipping and manufacturing that e-mail had on the postal service, by interrupting the status quo.
Are you interested in making a more informed decision about property as an investment? Contact us to speak with one of our friendly consultants today.