WEBINAR- How To Predict Real Estate Better Than Bank Economists The key to success in property investment, lies in identifying locations which will outperform the general market over time and pinpointing the right time to take action. Anyone can learn the basic tools for understanding property market dynamics to determine when to get into the market and where to buy for long-term success.
Buyers’ agent Kate Hill, of Adviseable, joined Hotspotting founder Terry Ryder on a recent webinar to reveal the simple principles for pinpointing good places to invest. Hill says:
* Learning the tools for identifying the right location to invest is easy
* Exposes the myths about real estate predictions
*Investment winners ignore the noise
* Buying the right property is essential
* Reveals the locations which demonstrate the principles future growth markets
“There's so much air space that is given to this topic, I guess because it is Australia's biggest and most favourite asset class. You’re going to come across endless amounts of content but it's back to basics – it’s all about demand and supply, the balance has to be right,” Hill says. “If demand outstrips the supply of whatever it is that you are buying, you're going to need to pay more for that item in demand and that equals a growth in price for the item.”
LEARNING THE TOOLS FOR IDENTIFYING THE RIGHT LOCATION TO INVEST IS EASY
While simple, Hill says investors need to put some work into finding out why a location is in demand, how long that demand may last and what ongoing supply is like. Affordability is one thing driving buyers to these areas, but also investors need to be aware of the underlying economy and strong jobs nodes. Solid investment locations should have good future spending on infrastructure projects, and they need to be the type of projects that will bring people into the area. “Such as hospital expansions, road upgrades, schools being built, infrastructure that caters for a growing and thriving population. That is its key, knowledge of that kind of imminent infrastructure obviously can provide you with a really good opportunity to make an investment early on.” It’s also important to look at the demographics of a location, who lives there? Is the population growing faster than the national average? Who are the people moving to that area and why?
THE MYTHS AROUND REAL ESTATE
Hill says it’s a myth that most economists know what they're doing when they predict what will happen in the housing market. She says they are just researching what has happened to the market in the past and try to make a forecast based on that. “On many occasions those forecasts are wrong,” she says, “You shouldn't be using their opinions and their guesswork to really determine your investing success. I can't stress how important that is.”Another myth is that interest rate rises affect property prices. “Interest rates started rising in May last year. They've obviously been on hold for a little while now, but the markets have not cooled. They've kept going for many, many other reasons.”
INVESTMENT WINNERS IGNORE THE NOISE
Investors should “ignore all that noise”, from economists, the media and politicians. “It (particularly media stories) are not always fact. You have to tune it out and stick to your plan. It’s important to have a plan. Don't just jump in on realestate.com and start looking around at what's out there. Have a solid plan around how much net worth and equity you need and when you want to buy and how many properties, you're going to need to get to that point to suit your risk profile.” It's also essential you seek professional help including: a mortgage broker with experience with the investment property markets; an accountant who has worked with clients who invest in property; a buyers’ agent or investment advisor who can help you find the right location.
BUYING THE RIGHT PROPERTY IS ESSENTIAL
“You need to find the right property for those people who are going to be living there,” Hill says. “You're not buying the property for you to live in, you're buying it for somebody else to live in. But the property investment that you make has to suit you and your risk profile in terms of, obviously, budget and cashflow outcome. “There’s lots of different growth areas out there, but we need to pick one that's going to be right for you so that you can hold this asset for long enough for it to perform so that you don't have to sell it in a couple of years because you can't afford to hold onto it.”
WHERE THE CURRET GROWTH MARKETS ARE
Markets which Hill finds appealing include, Sippy Downs on the Sunshine Coast, which has been a solid performer, is still relatively affordable and has good fundamentals for future growth. As part of the Sunshine Coast it is part of a very large region with a growing, diversified economy with significant infrastructure investment including an airport upgrade, a new CBD and a huge medical precinct that is still being built. She also likes Toowoomba which has good infrastructure development and population growth and will benefit from the Brisbane Olympic and Paralympic Games in 2023. It is part of the inland rail link and is near the Surat Basin, but not dependent on it, so it benefits from mining but isn't relying on it. In Adelaide, the cities of Salisbury and Playford are appealing with infrastructure development and population growth. Both have rising rents, reasonable yields and vacancies are very low and still relatively affordable prices. Penrith and Liverpool in Sydney have strong population growth forecasts, vacancy rates are dropping and there is the nearby new airport. Armadale in Perth is experiencing massive population increases, at three times the state average, and has diversity in terms of industry, very low median house prices and rental yields are good. Although Hill says you do need to be aware that many Western Australia property markets can be volatile.
