Seasoned investors will say that location is the key to capital growth. Whilst this is often the case, making sure you purchase in a location at the beginning of a price surge can ensure your money is positioned well to grow. Knowing the signs that an area is about to rapidly increase is the key to property success.
- Demand vs. Supply
As with every commodity, an increase in demand and a decrease in supply will create a more aggressive market. As demand for an area increases you can expect to see properties selling quickly and the average days on the market decreasing.
- Bargains are Few and Far Between
The increase of demand sets the precedent for prices. The more prospective buyers decreases negotiating power and properties are likely to sell at or above asking price.
- Under the Hammer
Areas that have commonly been known for a high ‘private sale’ method of sale turn towards an auction approach as interest in the location increases.
- Rent Now or Forever Hold Your Peace
The rental market is frequently an accurate measure of an area’s success. As housing prices begin to raise the amount of vacant properties decreases. The standard vacancy rate for most suburbs is 3%, anywhere below that number indicates that an area is highly sought after. Investors keep track of the vacancy rates to determine which areas to buy into and are quick to pounce on suburbs with lowering vacancy rates. It’s important to keep in mind that more renters mean more investors and more competition.
- Less Means More
Current owners of properties on the verge of financial expansion often hold their properties waiting for the right time to sell to capitalise on the growth. In turn less properties are placed on the market driving a greater wedge between supply and demand.
- Check the Numbers
The number of viewers searching for properties in an area is a strong indicator for the amount of demand. Areas on the cusp of a surge will have more viewers keeping an eye on properties for sale hoping to secure a final bargain before the increase.