The positive sign of cranes lining the sky
Construction in an area is usually a good sign. The boom in the area could be a significant sign of good things to come. Corelogic Chip index December quarter results for 2017 showed Victoria having a strong housing growth which accelerated by 5% in 2017, which was the highest across Australian states at 4%.
The demand for housing was aided by developers seeking to capitalise on the high capital growth rates. This means that there could be more competition in terms of housing prices that will increase the value of your property. However not all construction is good.
Track the construction market
Researching the property market you wish to invest in is important. Knowing the construction trajectory for the past two years or more can indicate where a neighbourhood is going. Not all construction is good and can have a negative influence on property prices. American estate agency Realtor showed that the top three constructions that can pull the value of your house down are:
- Bad schools (22.2%)
- A strip club (14.7%)
- High renter concentration (13.8%)
Knowing the construction trajectory can also help you see whether the area is improving to see you get a good return on investment, or whether it will be a hell hole that will soak up your finances.
When taking a peek into our own backyard, the high prices that Australians must fork out for a roof over their heads is resulting in people looking for alternative ways. This can result in quick cheap infrastructure popping up, that will result in you having to cough out more than you expected due to high maintenance costs. The chances of being to sell your house could be greatly reduced.
Focus on quality rather than quantity
Construction is a clear indicator of supply and demand. It can reflect a positive interest of people looking to buy a home or a boom of industry in an area. Victoria came out on top of the Corelogic report due to its quality construction that boasts good house median prices. This is a good indicator for a solid investment. When viewing the area, it’s best to keep in mind the quality of construction. This can affect the selling of your own property in future. If things are falling apart at the seams despite the construction boom, run!
What is your residential home located next to?
Before you purchase your home ask questions and research. Find out if there is any construction scheduled in the next few months or years, and what type it is. The last thing you want is to buy a house where high commercial use is being planned. This could be restaurants, gas stations, or public transport construction that will leave literally you tossing and turning at night.
The median sale price range can be an indicator
When looking to understand the future of the value of your house when it’s time to sell, looking at the median sale price range can be a saving grace. Although there is much sweating, and possibly weeping, at how unaffordable prices are in regions like Sydney it can be a clear indicator of the quality you are investing in.
According to Corelogic, Sydney had a share of suburbs with a value of above $2 million which had increased to 18.7% in terms of its houses. While other major cities may not hit the $1 million mark, the price will still be a good reflector. If you find a cheap deal that is just too good to be true in an area with lots of for sale signs, it is usually not a good indicator of the neighbourhood.