Property Investment: What Are The Factors To Consider?
Finance and investment are often discussed in terms of cycles. Property valuers, Herron Todd White (HTW), took that notion to its logical conclusion for real estate when they devised the National Property Clock.
As the name suggests, this view of the real estate cycle has twelve points. The peak of the market is at 12 o’clock, then declines towards the bottom of the market at six, before showing the recovery that heads back up to 12 again.
Bottom Of Market
image source: Chan-Naylor
Property being what it is, the whole market doesn’t sit at just one point on the clock. Due to factors from local employment conditions to the impact of the global economy, suburbs and cities will be at different points of the 12-point boom and bust cycle.
The perennially tricky part is working out where suburbs might be placed on the clock so that investment decisions can be based on whether they’re ticking up to the boom or tocking back down to the bust.
Useful as the property clock can be, nobody can 100% predict the future, and unforeseen factors can put gum up the clockwork. Becoming too much of a clock-watcher can also distract investors from the long game, in which properties are ideally held for 7 to 8 years.
Factors to consider are:
- local conditions like employment rates and environmental issues
- location-specific trends in sales and auctions
- national interest rates
- your budget
- what kind of property investment you want: rental, development, commercial or occupy-and-renovate
- whether you are you looking at short-term or long-term investment property itself – is it in good repair or will it require significant work?
- What kind of tenant or future buyer will it appeal to?
if you are thinking of buying or selling property, contact United Global Capital today on 03 8657 7640 or email [email protected] for a no cost, no obligation consultation and learn how you can position yourself for success.