8 Parameters of Capital Growth

Hey guys,

I'm just trying to wrap my head around how to pick up a suburb with a potential of high capital growth. I came across this article which I found super useful.

http://hotspotcentral.com.au/infogr...34e7be645d5c961b678e355d9aa164f9fdae4072d998d

Do you guys actually use these 8 indicators in your search?

The same Web site has a search engine that chooses for you top growing suburbs based on those 8 parameters. The link is here:

Boomtown

What does everyone think about it?

P.S. I tested the engine/algorithm on a few Brisbane suburbs I'm closely monitoring and it all makes sense.

 

Mostly they look at the lagging indicators - things that indicate an area is popular and that both buyers and sellers have realized that. So they probably do indicate a rising suburb.

You are likely to do better with a list of leading indicators that allow you to get in earlier and pick up the best deals - things like infrastructure projects.

 

Curious did you check it out on Perth

 

Some interesting info in this, its not hard to find moving/rising markets if in fact this is what is happening.

All the indicators they mention are one way, but its also important to speak to many re agent agents, people on the ground to give you a picture on a micro level, that was a big word for this time of the morning.

MTR

 

For Brisbane the results it gives make sense like I said.

I attached the top 10 results for Perth, although it's units only . Only the first suburb, Palmyra (don't know anything about this suburb) has a good CG score, the other ones are in balance. I'll attach one for houses too later.

 

Use multiple sources of data, both qualitative and quantitative to corroborate your hypothesis as well as on the ground key players.

Never, ever rely on one website or 1 or 2 indicators to make your final decision.

 

Really, would like more info on this, I was really joking not expecting anything to come up.

I understand everyone has different strategies, I don't feel like I am going to miss out if I don't buy in Perth today, timing the market for me is far more important than time in the market, of course you can make money doing both, time frame will be different though.

 

That's my approach too. Timing the markets or thereabouts. And despite what many say, it's really not too difficult.

This is basically the process for me:

1.Timing the market as best as possible.
2.Then buying BMV
3. Add value deal
4. Execute the deal, add value (hopefully the market conditions will also work in my favour to add more $$$ along the way)
5. Exit deal at the end, sell, hold or combination.
6. Take profits/refinance equity
7. Back to step one, look at markets/opportunities and new deals.

This way I'm looking to make money from three angles. 1. BMV, 2, add value and 3. improving/rising market conditions.

 

This is top 10 for Brisbane houses within 550-650k range (you can select price range that suits your budget).

Does it make any sense to you guys?

 

This is top 10 for Perth houses within 550-650k range (you can select price range that suits your budget).

Not the suburbs I'm interested in, too far out.

 

Agree 100% Marisa,
I bought in Frankston in 05, 09,11

Sold all in 2014

Its the peak now in this area aka booming!
So that was 9years 5 years and 3 years I held and achieved bugger all growth compared to if I sold now.
My sister & brother in law bought in early 2014 in Langwarrin area and bank valued 175k more in this time frame (most I sold mine for was 100k more than I paid not including CGT holding costs etc)

Lesson learnt.. screw time in market

 

Eh sceptical.

Realist, I've noticed that you've been trying to do a lot of research into figuring out the best locations to buy into. I have to say your approach so far seems to be technical or mathematically based.

But have you been to many home opens yet? I think nothing beats being on the ground in terms of researching what to buy.

I was the same as you for my first property purchase - looking at residex reports, trying to glean whatever information I could from various online sources. Once I hit the ground, everything I had looked at beforehand was out the window because I could actually see the properties and other buyers and what they were doing week to week.

 

You left the market...

Median house price for Frankston according to RE.com

07 - 280k
14- 372k (when you sold, which is the 100k)
15 - 428k
16 - 460k

So if you held onto it for another year you would of had ~50k more of 50% more CG than you had for the previous years.

Also time in the market only works if you buy good quality stuff that is constantly in demand.

E.g. I bought in Wastsonia in 2011 but lets use 07 since this can compare to yours.

07 - 346k
11 - 510k (when I bought)
14 - 546.4k
15 - 605k
16 - 650k

Yes once we reach the peak it wont be doing much again but with such high buying and selling costs property isn't a great liquid asset. As you would destroy 50k easily in selling and buying, where as withdrawing the equity and putting the money elsewhere is a great way.

 

Hope it is true - looking to selling in Padstow which gets a 35.

 

Thanks mate.

That really makes sense to be if I'm to buy where I live, which would be a horrible idea at the moment. But how do you hit the ground, go to homes opens etc. If you are buying interstate?

Travelling once or twice interstate might be alright I suppose, but anything more than that would cost a lot.

 

Nope. I don't use any of them.

I would be careful of that. My parents just sold in Ringwood and it is a hot/peaking market. Boomtown rates it as 34/48... Good. I wouldn't touch it myself. I think it is cooked.

I'm looking in Bayswater, WA now for a PPoR, which scores 16/48 - poor. "Buyers are few and hesitant while sellers are keen to offer them incentives." Sounds perfect to me!

 

Thanks mate.

Why are you interested in Bayswater if you don't mind me asking? What makes is stand out above other suburbs in your opinion? Houses I've seen there are very expensive.

I personally think Bayswater will make a good investment because of its proximity to cbd and the train station. However I don't think it's the perfect time to buy yet, vacancy rate has consistently been increasing to date:
SQM Research - Residential Vacancy Rates

 

Proximity to the CBD, train and buses and a lot of established infrastructure. It's less expensive than Mt Lawley and Dianella but is as well located. In the next boom, price growth should be strong. I also like Bedford for the same reasons.

Vacancy rates do not mean anything when looking for a PPoR.

 

No it doesn't. Some of those suburbs are not in Brisbane.
Have a google into each of those ten places to see what is there.

 

Hey Angel,

The site only lets you choose the state unfortunately, not the city.