4 Ways to Tell that a Suburb is About to Surge in Value
No matter the reason for purchasing a house, the best time to buy in a suburb is always before it becomes popular and the prices spike.
Purchasing a home at the right time can make a huge difference to the price and value of the property. If you wait too late to buy in a suburb, the price will have already increased - meaning you’ll end up paying more.
But instead of simply guessing which the next suburb to boom is, there are a few ways you can identify early on that a suburb’s property prices are about to surge. These include:
Purchasing a home at the right time can make a huge difference to the price and value of the property. If you wait too late to buy in a suburb, the price will have already increased - meaning you’ll end up paying more.
But instead of simply guessing which the next suburb to boom is, there are a few ways you can identify early on that a suburb’s property prices are about to surge. These include:
#1: Investment in Infrastructure
When the government and local city council are making plans to spend money on roads, transport and schools in a specific area, this means they are planning for population growth. Keep up to date with news about new infrastructure in and around your city as this could lead you to the next growing suburb.
Be sure to keep in mind that infrastructure is not built overnight, so it’s much better to get in early as it may be a few years before the housing boom arrives.
#2: Changes in Sales Data
There are a few key factors to analyse in a suburb’s sale when researching potential hot spots. These include the average days on market, discounts and the number of auctions.
If the average days on market is decreasing for all properties in a suburb, this means that either demand is high or the pricing is just right. Buyers will be feeling the urge to purchase properties quicker if there is more of a demand in the suburb as they don’t want to lose the property they’ve set their sights on.
Similarly, if there is a higher demand for properties in a particular suburb, agents no longer need to use discounts to attract potential buyers. However, be sure to keep in mind that the discount levels could also be associated with the fairness of the original asking price.
It is also known that agents will be more likely to sell properties by auction when there is a strong demand for properties in a specific suburb. An auction will encourage potential buyers to continually outbid each other, consequently raising the price for the seller. But once again, be vigilant as it may also be associated with a competitive price setting or the auctioneer’s skills.
If the average days on market is decreasing for all properties in a suburb, this means that either demand is high or the pricing is just right. Buyers will be feeling the urge to purchase properties quicker if there is more of a demand in the suburb as they don’t want to lose the property they’ve set their sights on.
Similarly, if there is a higher demand for properties in a particular suburb, agents no longer need to use discounts to attract potential buyers. However, be sure to keep in mind that the discount levels could also be associated with the fairness of the original asking price.
It is also known that agents will be more likely to sell properties by auction when there is a strong demand for properties in a specific suburb. An auction will encourage potential buyers to continually outbid each other, consequently raising the price for the seller. But once again, be vigilant as it may also be associated with a competitive price setting or the auctioneer’s skills.
#3: Changes in Property Data
Along with sales data, you also need to analyse a couple of factors in the property data of a suburb. These factors include the vacancy levels and yield trends of the suburb.
When vacancy rates are under 3%, this means there is an under-supply of property and a high demand for rental properties. When suburbs vacancy rates decrease, this is usually followed by higher rents and property prices increasing as investors take advantage of the returns.
When vacancy rates start to increase, this shows an over-supply of properties and could mean the suburb is no longer desirable, especially to renters.
If a suburb’s trend is showing a high yield, this is usually a predecessor to capital growth. As renters can move around more often, they are usually the first ones to move to a location that has recently become popular, which then means the rental prices for that area will increase to meet the increased demand.
Once investors notice the higher yields in a certain area, they will start to show interest. Owner-occupiers are typically the next group of people to purchase in the area, eventually followed by renters who may decide to purchase property. This purchasing activity puts pressure on the suburb’s property prices, influencing them to rise.
When vacancy rates are under 3%, this means there is an under-supply of property and a high demand for rental properties. When suburbs vacancy rates decrease, this is usually followed by higher rents and property prices increasing as investors take advantage of the returns.
When vacancy rates start to increase, this shows an over-supply of properties and could mean the suburb is no longer desirable, especially to renters.
If a suburb’s trend is showing a high yield, this is usually a predecessor to capital growth. As renters can move around more often, they are usually the first ones to move to a location that has recently become popular, which then means the rental prices for that area will increase to meet the increased demand.
Once investors notice the higher yields in a certain area, they will start to show interest. Owner-occupiers are typically the next group of people to purchase in the area, eventually followed by renters who may decide to purchase property. This purchasing activity puts pressure on the suburb’s property prices, influencing them to rise.
#4: Adjoining Suburb Trends
It’s also common for buyers to look at adjoining suburbs to the popular ones they initially looked at, as they either cannot afford the popular suburb or there is simply no availability. When this happens, the adjoining suburb’s prices increase as demand rises.
If you are looking to purchase in a capital city, keep a look out for suburbs which are performing very well and consider the potential for growth in other suburbs nearby.
If you are looking to purchase in a capital city, keep a look out for suburbs which are performing very well and consider the potential for growth in other suburbs nearby.
