Follow the Money
Whatever your approach to property investment in Australia, it’s important to have a clear understanding of the many different factors that impact on property prices, both in the short term and with regard to long term capital growth over time.
Of these, it is a well-established principle that the infrastructure that is planned for development in an area is one of the key factors in determining the potential for an increase in property values. Therefore, when you are investing in property, having a good knowledge of the infrastructure that is planned to be built, as well as what is currently in place in a suburb, is essential.
How does infrastructure development affect property values?
Generally speaking, new and/or upgraded infrastructure in an area creates housing demand, and so significant developments in terms of transport, retail, education and health can be key to producing capital growth when buying an investment property.
Infrastructure is an important aspect of property investment in NSW and across Australia because it creates jobs during the construction phase, boosts the local economy by providing work across a variety of sectors (both before and during the building stage), and creates demand in an area through providing a range of ongoing community benefits, including employment.
Transport links, for instance, are an essential component to the desirability of an area. Upcoming areas in particular need to be accessible in order for demand to grow, and so a new development suburb should be well served by both roads and public transport if it is to be an attractive, long term option for property investors. Relatively straightforward and convenient access to airports will also make difference in terms of the popularity of a new area and increase the potential for both high rental yields and capital growth.
There also needs to be accessible services and retail facilities available if an area is to be consistently in demand. For instance, suburbs that are planned to have schools nearby are going to be more attractive to young families, as are places that will have hospitals and medical services that can be easily accessed. In addition, when looking for the best suburb to invest in, you should also consider the convenience and range of the shopping that is planned, as this is another significant factor that contributes to ongoing demand.
Other community features that are planned for development, such as sporting and entertainment amenities, are also important when you are considering where to buy an investment property. These are the sort of features that create demand in developing areas, and help to maintain it once a suburb becomes better established. For an investor, this is crucial to achieving high rental yields, as well as for capital growth over time.
Plan ahead for infrastructure growth
It does need to be borne in mind, however, that infrastructure projects can take some time to be completed, and so the resultant growth in demand may not occur straight away. However, this does not mean that you should delay purchasing an investment property in a high growth area until all of the planned infrastructure is in place — as has been shown, the is the most significant factor in achieving capital growth.
Therefore, one of the best times for smart property investment is when infrastructure projects have been tendered, and it has subsequently been confirmed that work will go ahead in the area where you are looking to buy.
Look beyond physical infrastructure when investing in property
At the same time, when you are analysing the impact of the infrastructure in an area on property prices, factors beyond physical amenities also need to be taken into account. The overall contribution that any planned infrastructure will make to a community and how it meets people’s needs beyond the construction phase also need to be carefully considered.
This means that the number of jobs new projects create during construction, and then how many ongoing employment opportunities they lead to, need to be factored in. A major road building project, for instance, will likely create a significant number of jobs and demand for housing during the construction phase, but this may not necessarily continue once building has been completed.
On the other hand, new hospitals, schools, universities and shopping precincts tend to create work both while they are being constructed and then into the future as well. On the whole, investing in an area where these sorts of amenities are part of development plans are more likely to provide long term capital growth than suburbs without them. Therefore, when analysing infrastructure, it pays to look at the wider economy of an area and the potential for expansion, rather than just the physical elements of what is being built alone.
Likewise, it’s important to understand the difference between planned and realised infrastructure. There are many things that can happen to prevent planned infrastructure developments from finally going ahead, and so it’s important to know how far advanced proposed developments are in terms of approvals and planning permission before investing in property in a particular suburb or district.
Get the best property investment advice from the experts at High Income Property
If you are new to property investment in Australia, or even if you have some experience in real estate investing, it can be difficult to get access to the right market information to enable you to identify high growth areas with significant infrastructure developments planned, or to be able to interpret that data in such a way that you are fully informed.
That’s where High Income Property comes in. Our expert team of property advisors uses the latest industry information to help you choose areas where the planned infrastructure can mean there is significant potential both for over time.
Get in touch with us via email at email@example.com or call us on (02) 8007 4001, and we will be only too happy to arrange a meeting to help you find areas that look set for high growth, and show you how to achieve prosperity through property investment.