Unlocking Potential: Exploring Vital Indicators for Identifying Growth Areas in the Australian Property Market
Supply and demand are fundamental concepts that drive value growth in most industries, including the property market. In order to gauge the state of supply and demand across markets in Australia, there are specific indicators that can provide valuable insights. By monitoring these indicators, property investors can gain a detailed understanding of the supply and demand dynamics in a particular market. In this blog, we will discuss some of the most effective indicators that can help you identify potential areas for future growth.
Days on Market (DOM):
The number of days a property remains on the market is an important indicator of supply and demand. When demand exceeds supply, properties tend to sell or lease quickly, leading to a decrease in the average DOM. By tracking the DOM in a specific market, you can identify suburbs that are in high demand and likely to experience growth.
Discount to Sale Price:
Monitoring the sold price of properties and comparing it to their listing price provides insights into the level of competition and demand in a market. As suburbs become more popular, the discount price on properties decreases, indicating a strong demand and potential for future growth.
Auction Clearance Rates (ACRs):
Auction clearance rates are a reliable indicator of the popularity of an area. Higher ACRs suggest that multiple bidders are competing to purchase properties in that particular market. Strong investment markets often exhibit high ACRs, making this indicator valuable for identifying areas with potential growth.
Proportion of Renters vs Owner-occupiers:
The proportion of renters compared to owner-occupiers in an area can shed light on the rental demand and competition. A higher proportion of renters indicates a greater number of landlords you may need to compete with when listing your property for rent. This indicator is especially relevant for investors looking to generate rental income.
Vacancy Rates:
Vacancy rates reflect the availability of rental properties in a specific area. Low vacancy rates indicate high demand, as properties are quickly occupied by tenants. Conversely, higher vacancy rates in less popular areas suggest lower demand. Monitoring vacancy rates, along with factors such as rental prices, location, and demographics, can help identify growth suburbs.
In conclusion while there is no perfect suburb, understanding the supply and demand dynamics through these indicators can help investors find areas that align closely with their price and growth projections. It is essential to conduct thorough due diligence and seek advice from trusted legal and financial advisors when considering any changes or additions to your property portfolio. By staying focused on your long-term goals and aligning your investment decisions accordingly, you can maximise the potential for future growth and success in the property market.