Area Selection for Property Investment: Population and Vacancies

Part of ensuring that your property investment is successful is selecting homes for sale in a thriving, positive area.

You will need to ensure that your area of choice has three key features: a low vacancy rate, high rental yields and high rate of value growth.

All of these features combined will help provide you with a good level of return and a stable tenancy rate.

Population

When looking for a real estate investment in Australia, there are a number of great high density population areas to choose from.

Ranging from capital cities, urban suburbs to mining towns, there’s plenty of choice.

But when you’re looking for a property that will provide you with consistency in tenancies, it’s best to find an area with a high population rate.

A large population often leads to more demand for rental accommodation; however there are a number of factors that can affect this. For instance, a large population could lead to more properties being built, in turn, affecting the vacancy rate.

For instance,the NSW Department of Planning stated the Sydney population is expected to grow significantly over the next 20 years. This creates a number of opportunities for investors to take advantage of this growth in the coming years.

Vacancy rate

It’s best to find property in an area where the vacancy rate is below 3 per cent (Byron Bays’s hovers between 1–4% depending on time of year). The 3 per cent mark indicates a healthy balance between supply and demand, whereas anything either side of that figure creates an imbalance.

This week (September 12), Australian Property Investor Magazine (API) published a list of the Top 100 Rental Demand Hotspots across the country.

“In those areas, you’ll probably find would-be tenants in a frenzy, flocking to almost any available rental property, while investors call most of the shots,” said API Deputy Editor Shannon Molloy.

According to API’s list, Adelaide and Perth had the highest number of hotspot suburbs at 31 and 27 respectively.

Some of the suburbs identified in Perth include Stirling, Dianella and Armadale – the large number of properties with high demand has been attributed to the mining activity seen in this area over the last year, according to API.

Furthermore, API attributed the number of hotspots for real estate in Adelaide to the quiet property market in the city. This has led to more people choosing to rent accommodation rather than buying houses for sale.

Article courtest of Ray White.