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Not all property, or the suburbs/zones they are built in, should be tarred with the same brush. There are some key metrics that should be considered when trying to recognise a healthy suburb for your investment.
In recent times you may have read several articles on risk associated with oversupplied apartment markets across the nation.
This is a topic that Mosaic Property Group has regularly addressed over the years in various insights; specifically that not all property, or the suburbs/zones they are built in, should be tarred with the same brush. There are some key metrics that should be considered when trying to recognise a healthy suburb for your investment.
The table below shows a sample of well-known Brisbane suburbs. We’ve grouped some important metrics for analysis and provided an explanation as to why these factors are paramount when looking for the right location to invest in property.
Data sources: CoreLogic RPData, PriceFinder, Cordells, ABS, SQM Research
Ratio of Detached Housing to Apartments
A high proportion of detached housing to apartments is critical. Because detached housing contains a greater land content, it’s typically perceived to represent the real value of a market. Detached houses provide a safety net to the apartment market or a logical position where an apartments value is easily identified and justified. If markets experience challenges, such as a significant loss of investor demand, there is a risk that apartments found in locations with limited detached housing can struggle to maintain their value.
Value of Detached Housing
Not only is a high proportion of detached housing to apartments important, you also want the housing market to be of a high value.
Once again, you are more likely to see apartments hold their values across all market cycles when well established detached housing markets exist for obvious reasons.
You are more likely to see apartments hold their values across all market cycles
Profile of Ownership
A high proportion of family households indicates a stable market, they are not transient and can’t uproot their life quickly. This ensures a decreased likelihood of large volumes of stock coming on the market for resale in a short period of time.
A high proportion of dwellings owned outright indicates a decreased likelihood of financial pressure being experienced and consequential forced sales resulting in large volumes of potentially discounted stock coming into the market.
Weekly household income is self-explanatory. The higher the incomes, the less likelihood of financial stress and owners needing to sell quickly under pressure.
You can’t go past Windsor, a suburb only 3kms from the Brisbane CBD that overwhelmingly meets all requirements
Supply and Vacancy Rates
The key to growth is high demand and low supply.
Vacancy rates offer one of the best indicators of the demand and supply equation in residential property markets. The lower the vacancy rate, the higher demand is relative to supply.
Viewed in correlation with a low number of apartments listed for sale provides comfort that the existing market is tightly held, which further reflects strong ongoing appeal and inherent demand for a location. Inevitably this also means restricted ongoing supply availability to the market as people retain ownership for long periods of time.
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