These days everyone knows that it is important to do the right kind of research before you buy property. Information is available all over the internet. Some is free, some you pay for. Data is abundant, and if you want to know about areas all over Australia, there will be someone providing a report about it.
The problem when you want someone to tell you the best area to invest in is that the industry is littered with dodgy spruikers, who provide all sorts of positive data to support the sale of a property on their books, which is likely better for them, than it is for you. It’s easy to make any area look good, if you pick and choose the data you supply.
So the question for the budding property investor is not ‘where can I find the data?’ – it is ‘how do I accurately decipher the data?’ To do that, you must know how to accurately ‘data sync’.
Information about an area is not only important in itself, but can tell a story when considered in conjunction with other data. Data is like a jigsaw puzzle piece, and it is only when those pieces fit together and complement each other that that data forms a complete picture.
Infrastructure
Not only must you make sure that the infrastructure which is being built is infrastructure which results in growth, it must also be appropriate for the target demographic, and that demographic must be one which drives growth.
Take the hospital projects in Cairns and the Sunshine Coast. The Cairns hospital project is targeted to improved services for an ageing demographic. An ageing demographic is not typically one which drives growth. Conversely, the Sunshine Coast University hospital project not only created a significant number of jobs during construction, but it is both a teaching hospital and one with services targeted toward the family demographic. Such infrastructure adds to the live-ability of an area and families to an area, and families are a solid driver of property growth.
Household Income
A high and increasing household income may seem to indicate a good area. But this is data which must be synced against other data. Is it a single industry town? If so, perhaps that industry is having a boom which may, or may not, last. What about employment? Consider the number of part time jobs as at the last census and compare it to this census. Are there less people in part time employment and more in full time? Are there less children under 4 and more over? This could be the result of mothers returning to full time work once their children are in school. In that case, the improvement in household income is not necessarily on an upward trajectory – it could be because the area was a first home buyer area and now the families are growing up and people are just going back to work. Growing household income may seem like a growth driver, but knowing why it is growing allows you to dig deeper into what’s really going on.
Property Type
Education levels in the area and demographic mix help you determine what kind of product is the best to buy. More blue-collar workers or more professionals? More singles or couples? More families with children or families without children? All these factors determine what property type will be most in demand.
Tenure
What is the percentage of renters to home owners? Is it higher than the last census? Is it higher than the national average?
Is it higher because more investors have bought off home owners recently, creating a temporary glut of rentals on the market? Are more people in temporary, casual or part time employment? If so, this could indicate that the population is itinerant and so a high percentage of renters is not a good situation. If not, it could be that people really want to live in the area, they have enough work to do so but there are fewer houses available to buy, and so this is a positive situation. Look at values over the past 5 years – have they risen sharply? If so, then affordability can be the reason for higher renters.
And so, you can see that knowing the data is one thing, but understanding how it syncs to create an entire picture is another one altogether. To be an effective investor, you need to go that one step further and analyse and sync the research, rather than just take it at face value. That way, you really can be that investor who sees into a crystal ball and buys in before everyone else realises they should.
