8 Signs a Suburb Is About To Surge In Value

Jodie O'Brien

Jodie O'Brien

General Manager

8 Signs a Suburb Is About To Surge In Value

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Understanding the factors that trigger price growth helps ensure you pick a winning investment at the right time. This way, you will get the most value for money when you buy an investment property

When it comes to investing in property, capital growth is king. While income helps you hold on to your investments over the long term, it’s capital growth that will have the most impact in the end.

#1. The average days on market are falling

If demand exceeds supply, buyers will quickly snap up the available property, so the amount of time a property spends on the market drops, resulting in low average days on market.

#2. Level of discounting drops

If demand is on the rise, vendors are no longer compelled to offer discounts to attract buyers.

As demand increases and supply decreases, this pushes property prices up. When prices are higher, this increases the value of your investment.

#3. More properties are being buctioned off

Real estate agencies will often sell properties by auction when the demand for property is strong. This allows potential buyers to outbid each other and push prices up for the seller. So a rising number of auctions and high auction clearance rates may be a sign of a market heating up.

And as the market heats up, the value of local property will increase. 

#4. Falling vacancy rate

A low vacancy rate means there is a shortage of rental accommodation for the number of tenants in the market. Generally, a 3% vacancy rate indicates that a market is balanced. A rate below that means there is a shortage of rental properties, and above it means a surplus.

When the vacancy rate starts to fall, this often results in higher rents and an increase in prices as investors move in to take advantage of higher returns.

#5. Rising yield

Tenants are able to move houses much faster than owner-occupiers. 

So, when a location becomes popular, tenants will move in first, pushing the price of rent up. 

Investors and owner-occupiers will soon follow, buying up properties in these growing areas. This buying activity causes property prices to increase. 

#6. The Level of Stock on Market is Dropping

A low level of available properties up for grabs in an area means that owners are not willing to offload their properties and anything that comes online is quickly snapped up by buyers.

#7. High Level of Online Interest

If there are a large number of people searching for property in a location where there is not much property for sale, this could indicate strong demand and could be a sign that values are about to rise.  When a location becomes popular, tenants will be the first to move there.

#8. Prolonged Underperformance

When a suburb has underperformed for an extended period, while markets around it are starting to rise, it might mean that the suburb is about to see a turnaround as well. 

Generally, the longer the market has underperformed, the quicker the recovery is going to be when it comes.

When assessing a suburb, make sure you look at these data in combination with the other stats, to get the full picture.

 Furthermore, the longer you are in the market, the higher the chances of making a big profit. However, you could make quicker gains by timing your entry and buying before prices start rising.

For other ways to get the best returns from your investment property, see Affinity’s Property Investment Analysis Report for even more ways to help yourself.