How to pick property for capital gain

A look at the fundamental winning aspects of properties that more people want.

1601 0

Over the past 20 years the Australian housing market has experienced several waves of price booms, and some properties have performed better than others. So how do you pick which ones are likely to gain in value?

According to figures from the Real Estate Institute of Australia and analysis, the major capital cities have experienced strong house price growth over the past 36 years and all have increased at least 1100 per cent since 1980.

The median house price in Sydney has also more than doubled in 20 years and are still going strong helped by record low interest rates.

The number of Australian suburbs now fetching $1 million has also surged since interest rates started being progressively cut four years ago.

The Reserve Bank of Australia’s official cash rate stands at 1.5 per cent.

Key to much of those price gains has been location.

Proximity to amenities, a suburb’s reputation, it’s vibe and whether local features are well kept by the locals and council all make a significant difference to a property’s value.

Then there are those special features such as whether a property is close to waterways, good schools, shops, cafes, entertainment hubs or the CBD and of course views and natural light.

Size matters
The size of a property will usually impact upon its price because the space determines how many buyer types, such as families, a property will appeal to.

Jobs and wages
When unemployment rates are high and less people have jobs, people simply do not have the extra income to meet mortgage repayments or to invest.

Wages growth is another consideration. If wages are not growing in the economy or a local area then it is unlikely that people will be able to bid higher for property prices.

Infrastructure and building activity
Infrastructure development is a key factor that many buyers are willing to pay more for. Infrastructure may be transport links, shopping centres, bridges and toll roads. All of which can make living in a particular area easier and attractive especially if maintained and expanded upon to cater for an area’s future growth.

Residential construction activity is booming at the moment as buyers take advantage of lower interest rates. It’s a good idea to assess how much new development is actually happening in your local area and whether it’s happening in units, detached homes or through renovations.

It’s also important to assess if there might be too much new housing and if so, ask yourself or seek advice on whether this could lead to oversupply problems in the future, which would could weigh on property prices.

Market pricing
This is where researching the local area is key and making the most of property search websites such as this one with Domain, and

Subscribe to Financy®

Get your Financy fortnightly fix with Financy Rewards, content and more. Plus each quarter you'll receive the latest Financy Women's Index, helping you keep pace with women's financial progress.

In this article