Posted on March 29th, 2024

Where should I buy my next investment property?

If you’re wondering where you should buy your next investment property, you’re not alone. Many real estate investors struggle with this decision and for good reason – choosing the right location is key to a successful investment.

When it comes to investing in real estate, many factors come into play such as market trends, demographics, economic conditions, and more. So how do you choose the best location for your investment property?

The first thing to consider is market trends.

Understanding the Market for your next Investment Property

What are the current market trends? Is it a buyer’s or seller’s market? Are home prices on the rise or declining? These are important questions to consider when deciding where to invest in real estate.

According to CoreLogic data, the current real estate market favours sellers. In January of this year alone, there were approximately 29,000 sales. These figures represent a 3.6% increase compared to the average annual volumes of the previous 5 years. The median days on the market for these properties was 34 days, which signals a decrease from 36 days in the previous year.

This data points to a strong seller’s market with high demand and rising home prices. This is good news for investors as it indicates potential for a higher return on investment in the short term.

However, investors should not be discouraged from purchasing a property in the near future. It’s predicted that inflation will soon ease which will present an opportunity for investors to access more cost-effective financing options.

Interpreting Current Market Data

When interpreting current market data, potential property investors must evaluate local trends that impact property values. Analysing data from reliable sources such as CoreLogic helps in understanding how quickly homes are selling and at what price,and provides insight into the local demand for properties. A low median number of days on the market typically suggests a competitive market, where properties are in high demand. Rising home prices may signify a fruitful time to invest, as it suggests that the market is performing well.

Investment Property Criteria

Location: Always remember the adage “location, location, location.” Consider factors like the proximity to amenities, schools, public transportation, and economic centres.

Economic Stability: Evaluate the economic stability of the area. Look for locations with a robust job market, as areas with strong employment opportunities tend to attract tenants.

Future Developments: Be aware of planned infrastructure or real estate developments as they can significantly affect property values.

Rental Yield: Calculate the potential rental yield, which is the annual rent as a percentage of the property purchase price. A higher yield can suggest a better investment.

Capital Growth Potential: Assess the historical price trends in the area for an idea of potential capital appreciation.

Investment Property Strategies for Selecting a Location

When selecting a location based on long-term investment goals, investors should consider areas with predicted population growth and urban expansion. Consider neighbourhoods with upcoming government investment in infrastructure—such as new transportation lines or public facilities—as these can provide early investment opportunities.

Correctly assessing the true value of an investment property requires a combination of market research, local knowledge, and consideration of what makes an attractive rental property. For example, properties close to universities or hospitals tend to have a higher demand from students and medical professionals, making them promising investment opportunities.

Additionally, investors should consider the availability of public transportation options and community amenities like parks and shopping centres. Locations with easy access to these features can attract tenants and potentially lead to higher rental yield.

Top Locations for your next Property Investment

Certain areas will outperform others in terms of return on investment (ROI) or rental returns due to the interplay of factors such as population growth, infrastructure development, and demand for rental properties. Here are some top suburbs to consider for your next property investment:

Top 5 Sydney Suburbs

Sydney’s housing market witnessed modest yet encouraging growth in January of this year, with a reported house value increase of 0.2%. Taking into account its annual performance, the real estate market in Sydney has demonstrated an impressive rise of 11.4% over the past year. This trend highlights the city’s resilience and the persistent demand for property in one of Australia’s premier urban hubs.

5 Sydney suburbs to consider for your next property investment:

Coogee
Maroubra
Cammeray
Balmain
Rozelle

Top 5 Melbourne Suburbs

Melbourne’s housing market has been experiencing a steady increase in property values over the past year, with an overall growth of 3.9%. Melbourne house prices are now 4.2% below the record high, which was in March 2022, meaning that now could be the perfect time to invest in a Melbourne rental property.

5 Melbourne suburbs to consider for your next property investment:

Hampton Park
Ferntree Gully
Campbellfield
Melton
Wandin North

Top 5 Brisbane Suburbs

In January, Brisbane’s housing market saw a 1% increase in house values, amounting to a 14.8% increase over the past year. This upward trend is expected to continue throughout the year, making it an attractive location for property investment.

5 Brisbane suburbs to consider for your next property investment:

Tennyson
Bracken Ridge
Carina
Mitchelton
Camp Hill

Top 5 Perth Suburbs

Over the past 12 months, Perth’s housing market has shown the most significant growth out of Australia’s capital cities, with a 16.7% increase in house values. This is a promising sign for property investors, especially given the city’s affordable property prices compared to other major Australian cities.

5 Perth suburbs to consider for your next property investment:

Seville Grove
Osborne Park
East Cannington
Salisbury
Gosnells

Your Next Investment Property Purchase In 2024

When considering your next investment property in 2024, it’s imperative to keep several things in mind:

Location: While considering location, ponder the qualitative factors as well—neighbourhood safety, school quality, local employment rates, and general quality of life.
Research is key: Take the time to thoroughly research potential suburbs. Look at the historical data to identify long-term growth trends and investigate the impact of upcoming infrastructure projects.
Think about tenant appeal: Choose a property that will attract long-term, quality tenants. Consider location, proximity to local amenities like schools and parks, and features such as off-street parking or outdoor spaces.
Affordability: A suburb that offers a lower entry point can mean a higher rental yield, particularly in areas with growing demand.

Summary

Choosing the right location remains a cornerstone of property investment success. Invest in growth areas with strong tenant appeal and consider the long-term potential of a suburb, not just short-term gains. By keeping these factors in mind and staying informed on market trends, you can select the right investment property for your portfolio and set yourself up for success in 2024.

At Ironfish, we help investors to make well-informed investment decisions based on our comprehensive research and understanding of property markets. We collaborate with developers who have a proven track record of excellence, including award-winning projects. Our focus is on matching the right property type with the ideal location at a competitive price point.

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