The key fundamentals of investing in the Australian residential property market are where, what and when to buy. These fundamentals are driven by macro and micro indicators.
Macro indicators tell us where to invest and looks at an area’s population growth, government and private infrastructure investment, economic health, employment and the supply and demand of property.
Micro indicators tell us what to invest in and look at a region’s amenities, access to transportation design, quality and rental income. Research based on our top 10 key macro & micro indicators will assist you with the decision that’s best for you as we consider and analyse the factors below and match them to your investment property plan.
The government and private enterprise spend billions of dollars each year on roads, transport, hospitals, mining, resources and more. Property investors need to look at what they are spending the funds on and what impact the infrastructure has in those areas in the long term.
The Australian national population growth rate for the year ended 30 September 2014 was 1.5%. Take note of where these people are moving to. Are they capital cities, regional cities or regional areas? We also look at interstate migration, which is generally associated with employment opportunities or lifestyle choices.
Economy and Employment
What is the diversity of industry? Consider what business and industries are located in the area you are investing in. Does the area have a cross-section of industries that can support current and future employment? Or is it reliant on one main industry?
Supply & Demand
Is there an oversupply or undersupply of residential housing? If there is an undersupply, you are likely to see increased rental income and improved cash flow for an investor. In this scenario you will also see a lowering of the vacancy rate. Undersupply could also put pressure on property prices. With an oversupply, the opposite normally occurs for an investor. Rents decrease, vacancy rates increase and property price can decline.
Stay tuned for Part 2.......