Profiting From Property Is Not Just About Luck

Sometimes there is money to be made in property in unexpected places. That is why, for the property investor or homebuyers keen to ensure their purchase will show a profit, researching capital growth is crucial.

We all know someone who has bought on impulse – went to an open home and made an offer, drove past the auction, jumped out of the car and bought the property. Sometimes, it is a good property in a good location and turns out to be a lucky buy. But not always.

[imageframe lightbox=”no” style_type=”dropshadow” bordercolor=”” bordersize=”10px” borderradius=”0″ stylecolor=”” align=”right” link=”” linktarget=”_self” animation_type=”0″ animation_direction=”down” animation_speed=”0.1″ class=”” id=””]Profiting from property[/imageframe]

A key part of any investor’s research is capital growth data – in which suburbs have prices grown the most? These are not always the same as the suburbs with the highest prices, because those prices may have been high to start with.

REIV’s new median price data shows some surprising and some not so surprising entries on the list of Melbourne’s top 10 capital growth suburbs. Top of the list was leafy Camberwell, with great transport, shops and schools, where the median price of a four-bedroom house was up 13.1 per cent in the first three months of this year.

A three-bedroom unit in Toorak, Melbourne’s most expensive suburb, with 12.8 per cent capital growth for the quarter, was second on the list. And three-bedroom homes in two suburbs highly sought after for their school zones, Glen Waverley, with 12.7 per cent, and Balwyn, with 12.3 per cent, were third and fourth.

Also on the list are two-bedroom units in Camberwell, three-bedroom units in Brighton, where construction of high spec apartments and townhouses is meeting demand from empty nesters keen to downsize but remain in the same suburb.

But there were some unexpected entries on the list – evidence of the price growth in Melbourne’s outer suburbs, driven by demand from families seeking space and unable to afford to buy further in.

So a four-bedroom house in outer suburban Ferntree Gully, with a median price of just $558,000 compared with $1,775,000 for that four-bedroom Camberwell, grew 9.4 per cent. It headed off number 10 on the list, sought-after Balwyn North at 9.0 per cent.

Ahead of both of them was a three-bedroom home in Ringwood East, fifth on the list with median price capital growth of 11.2 per cent for the quarter, yet a median price of just $565,900. Wantirna South, with a $575,000 median, was seventh on the list with 10 per cent growth.

Behind each of the entries on this list lies a property story: affordability issues, growing demand for outer suburban property, the move to units in sought-after suburbs and school zones. Each is there for a reason, but only research will reveal those reasons to the canny investor.

Making money from property can involve luck, but more often it is the result of diligent work – which areas have shown good growth, where is future growth likely and why?

The key to a good property investment, as with any investment, is to do the research which will help to inform your final decision. It should also help add value to that decision in years to come.