There’s an assumption made by too many Townsville Property investors that new infrastructure always equates to higher property prices. When determining a great investment property in the Townsville housing market there are a number of factors that need to be considered.
But government promises to Duplicate the Bruce Highway, build shopping centers or a hospital does not automatically mean the surrounding area has just become bargain territory over which you should swoop.
The idea such multi-million-dollar developments must supercharge property prices is based on the false premise that government investment is the most important thing affecting price growth in Townsville real estate. But it is not.
Instead, changing demographics is a much more powerful indicator.
Demographics > improved infrastructure
Property prices increase where people want to live. As an investor, you want to operate in areas where residents enjoy stable employment and wages growth.
This attracts affluent renters who are prepared to pay increasing amounts to live in the area. And the inability of local supply to meet this demand underpins any rise in property values. This has been especially prevalent in the Townsville rental market in the past 18 months.
If new amenities such as shopping centers or a school attract affluent buyers, that’s excellent news. But it’s the demography change that creates high rental income and decides the capital growth of an investment property.
Experienced investors will research the demographic trends and consider how they might be affected by any new infrastructure project. This will lead to an improved real estate housing market.
A new university will bring students, lecturers, and those who provide services. A hospital, on the other hand, may serve only those who live in the area. Any new employment would likely be insufficient to have an impact on property prices.
Speak with an experienced agent
As an experienced Townsville property agent, I have worked with many investors with long-term strategies.
Together, we look at the potential market for tenants as well as the prospects for capital growth. Consideration is given to any promised government project for the area, but only in the context of the demand, it might generate for local housing or new property.
Here are some basic guidelines for investing in areas with promised improvements to services.
- Prioritise areas where residents have “above average” wage growth as they will often be associated with increased property annual growth.
- Do not assume cheap areas or property are suitable investments. Although there are great investments at a lower cost compared to capital cities, not all properties are going to have good returns.
- Always consider local market trends and prevailing economic confidence before purchasing a house.
- New government projects can lead to higher property prices, but only if they attract new residents with stable employment and wage growth.
- A new freeway or shopping center can spike property prices for a year or two, but then level off. Consider your investment strategy and time lines and look at annual growth accordingly.
- Data shows that densely populated areas often produce the best capital growth, as you can be confident of ongoing demand for local property.
- Selecting Townsville suburbs popular with high migration levels can provide capital growth and steady rental income.
- Watch out for any impending, large-scale releases of property by developers, as these can depress prices in the short- to medium-term. In those situations, you might want to time your purchase strategically.
In all circumstances, it’s advisable to seek professional financial advice before buying an investment property or expanding your portfolio. If you are looking for a great accountant for your investment property or a financial adviser get in touch and we can recommend you to a local business we work closely with. My article here is for general purposes only and is not professional advice.