Picking a winning suburb is all about the stats. Source: Supplied
RISING real estate prices and low interest rates have rekindled interest in property investment, but how do you pick a suburb that is likely to deliver strong future growth.
Investors and owner-occupiers have enjoyed rising home values in the past year, and the Reserve Bank last week kept its official interest rate steady at 2.5 per cent – its lowest level in more than 50 years – and signalled no inclination to lift rates soon.
Property Club national manager Troy Gunasekera says growth is driven by supply and demand.
"Investment opportunities will be driven in areas where supply is limited but demand prospects are increasing," he says. Population must also be growing in the suburb.
Peter Koulizos, a university lecturer and author of The Property Professor's Top Australian Suburbs, says he often looks through Census data from 2001, 2006 and 2011 to spot trends that can shape property purchase decisions.
"Is the income of the population that's moving in there increasing at a faster rate than the state or national average?" Koulizos says. "Is the number of university-qualified people increasing faster than the average? The thing that drives prices up is people with money." He says it is vital to visit an area where you are thinking of buying.
"Look at the people walking through the suburb in the middle of the day. Is it groups of youths with skateboards or young mums pushing prams?
"Does the butcher only sell chops and sausages, or more expensive cuts of meat that indicate a relatively wealthy demographic is moving in? That's research you can't do behind your desk."
Key factors that Koulizos focuses on for growth include suburbs close to the city or the sea and undervalued suburbs that are surrounded by more expensive ones.
He expects national house price growth in 2014 to be better than 2013, led by Brisbane, which has underperformed in recent years.
Gunasekera also expects good growth in property prices.
"Housing supply is not keeping up with our above-average population growth," he says. "There is a significant undersupply of new dwellings, with the number of new dwellings similar to that seen 25 years ago."