Top 10 Capital Growth Criteria

Hey guys,

I'm in the process of liaising with my BA in the quest for a property with the focus on CG. I asked him to give me a list of top 10 suburbs based on following criteria:

1. What are the schools like in the area, their rating?
2. Infrastructure (are they all on the rail line; what about buses)?
3. How far are they from the Uni?
4. What sort of demographics?
5. How do they compare to the neighboring suburbs in price percentage wise (any potential for ripple effect)?
6. Are there many apartments in the area?
7. What is density of public housing in these suburbs?
8. What is the median price compared to the last peak (I believe 2008, not sure)? Have these suburbs already experienced a significant growth and hence not much room left?
9. Is there a lot of land supply available in the area?
10. How much would be a good buy (price)?
11. What rental yield can we expect?
12. Distance to CBD?

Is there anything else I should add to ensure that really the strongest suburbs are included on the top 10 suburbs list, based on the capital growth drivers?

The BA will make a top 10 list based on these criteria. From there we can short list top 3 ore 2 so and start the search.

Many thanks!

 

Yes. you forgot the most important driver of cg..
Access to jobs
..kinda linked to point 12 but it does not always have to be...usually is though.

 

Shouldn't the buyer's agent be the one that comes up with these criteria? Of course always good for you to be able to identify the criteria but feels a bit like you doing part of the BA's work for them.

 

Well he's about to create a document of the top 10 suburbs based on all those criteria..

 

How to word that criteria then?

 

Should also include:
Population growth
Income growth
Employment oppprtunities.
Gentrification
Vacancy rate
Development activity (supply)
Zoning.

 

Brilliant idea!

Are we missing anything else?

 

Number of cafes and other hipster-type business (seriously).

 

I'm kinda thinking along the lines of "I want best chance of capital gain with [x] budget in the [insert city] LGA. Please use your experience and judgement to provide me with your suggestions along with supporting reasons for discussion".

 

Haha good one. And very true as well, it certainly has it's own appeal.

I'm buying in Brisbane (450-630k budget) and I'll let you know guys what the top 3 are after the research/analysis.

However wouldn't it all come down to: "Buy a house, with as much land as possible, and as close as possible to the CBD within your budget, preferably on the rail line"? Simple. As the city is growing, expanding, everyone will want to be as close as possible to CBD, jobs, restaurants etc.

 

Bravo Zlatane!

Nicely worded..

 

Not really. Some suburbs might have already had strong CG. You buy next door where the CG has not occurred yet. I did this in Melbourne. It worked. My criteria were: within budget, access to train, enough land to develop, some development in the area, next to a growth suburb, as close to the CBD as we could afford (within budget). We got good growth out of it.

 

• Recent growth - Might be too late to get into a suburb if it has experienced significantly greater in the past 12 months compared to its long-term average
• Average income - Indicates capacity for owner occupiers to bid up values
• Investor/owner occupier ratio - Suburbs tightly held by owner occupiers (70%+) tend to experience more consistent growth over a long period of time. Suburbs with high percentages of investors experience lumpy growth. Spiky during boom times, flat for years in other times.

 

What do you mean by some development in the suburb?

Thanks

 

I can see how the hipster type business attract customers.

 

These are really good points. I just need to wrap my head around the language.

So just to clarify, you mean that 70%+ properties on the street or in the suburb should be occupier owned rather than investor owned.

Also where do we find what it's long-term growth potential is?

cheers

 

Keep 'em coming.

Is it reasonableness ask for references for the information we receive from our BA? This is given that we're so new to investing.

What are reputable sources to find the stats on houses?

In the future, how do I know it is a reputable source?

 

Population growth, income growth, transport links and infrastructure improvements are all important but more buyers than available stock in a desired suburb, area or city is what drives growth IMO.
Prices in Sydney for example would make no sense based on any other metric.

 

No...
This is a commonly held belief..there are too many factors that go into supply and demand for blanket statements like this to be true in all cases in all situations in all cycles.

 

So a basic supply and demand. Although those other factors you mentioned would all contribute to demand.

What about popularity of the city (tourism).

I imagine Sydney will stay strong in the future because of that aspect too.