Fundamental drivers of the property market - For investors

Whether you are a seasoned investor building your portfolio or considering your first investment property purchase, there are a few things to look for when assessing developments and how these projects can generate high returns. According to David Whitting, one of Queensland’s most experienced property industry executives, there are six fundamental drivers of the property market.

Economics and employment

For an investor, the economics and employment opportunities at the property’s location are key when purchasing. Income drives the volume of property investment and the ability for renters to meet their payments. Consider the employment dynamics of the location, how many new jobs are being created, and the profile of these jobs. 

Population growth and demographics

While certain demographics are more inclined to invest in property, others are comfortable being long-term renters. Consider how many people are coming in and out of the location and their demographics. 

Infrastructure investment and government spending 

These make suburbs more attractive and increase property valuations and rents. It’s always important to consider whether things like new roads, hospitals, transportation projects, schools and universities are being built in the area. 

Supply and demand 

Consider how many new dwellings are being constructed in the location and their underlying demand. One measure of this is vacancy rates. If the vacancy rates are less than 3%, it tells us the property market is under-supplied or demand exceed supply - which is a good sign for new developments.

Affordability and the availability of money

When considering affordability, the question is whether the development is affordable for the demographic in the area. The final question is whether home loans and investment loans are readily available to buyers, whether interest rates are accessible or prohibitive, and whether there are government concessions and subsidies available that help to increase buyer demand.

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