Property Market Analysis: A Multi-Faceted Approach to Leading the Market

The property market in Australia is heterogeneous, meaning it varies significantly across locations, types, and conditions, resulting in an inefficient market where those equipped with accurate information and analysis can outperform those less well-informed. 

Rather than following the general, often advertised or publicly panelled, market trends on social media platforms by inexperienced advocates, leading the market requires specialist analyst identification of the specific indicators that drive property prices, then tailoring analysis methods to fit these unique factors. 

By applying a single, standardised model, using the untrained eye is an insufficient way to capture the complexity and nuances of the property market. The result can be a perceived high-performing property being purchased and underperforming. The fallout of this circumstance can cost the buyer greatly.

In our quest to promote stronger education of the complexities of the Australian property marketplace, below are eight key approaches to identifying and capitalising on the best markets:

1. Top-to-Bottom Approach

A top-to-bottom analysis involves evaluating broader economic and social indicators at a higher level to identify regions with strong growth potential. Once attractive regions are identified, a deeper analysis at the postcode or local area level reveals localities with superior performance based on metrics such as employment rates, population growth, land supply, and infrastructure.

2. Comparable Analysis

By analysing price points of comparable suburbs based on proximity and commuting time to the central business district (CBD), we can identify suburbs that may be overvalued or undervalued. This comparative approach highlights suburbs offering better value relative to their location and amenities, allowing investors to capitalise on areas with untapped potential.

3. Short-term vs Long-term Growth Comparison

Comparing short-term and long-term growth rates helps distinguish between temporary price shifts and sustainable growth trends. Recognizing whether a suburb’s value increase aligns with long-term growth projections helps avoid speculative markets and focuses on areas with lasting value. Short-term growth may accelerate until it reaches the long-term average, suggesting that prices could rise rapidly in the short term before stabilising at the long-term growth rate.

4. Qualitative Factor Analysis

Using our proprietary “Best 8” matrix, we assess factors such as schools, crime rate, education, and more. This qualitative analysis provides insight into a suburb’s overall investment outlook and helps to identify areas with high livability and long-term growth potential.

5. Growth Potential

To gauge growth potential, we evaluate the likelihood of future demand based on factors like family income growth, population growth, and market stability. 

We also assess the stock on the market for less than 30 days as an indicator of market turnover. This analysis identifies locations with balanced growth prospects.

6. Maximum Upside Potential

Understanding a suburb’s maximum upside by analysing borrowing capacity and the level of affordability helps determine the potential ceiling for property values. Combining this data with growth predictions, we can set realistic expectations for property sales and investment return potential.

7. Development Models

Following government priorities for infrastructure, priority growth areas, and planned developments uncovers future growth areas. Government-endorsed projects often signal economic boosts to selected regions, providing “green shoots” where early investment can yield high returns as infrastructure and economic activity ramp up.

8. Cultural Models

Recognising cultural trends allows for identifying regions with sustainable living prospects. Cultural understanding contributes to a holistic view of market viability, especially in areas focused on long-term, community-based investment.

When an investor enters the market to start or grow their property portfolio, they are often bombarded with blanket, recycled open-market data directing them to key areas or ‘sound investments’ but in actual fact, the supply of this data is meaningless without a professional perspective in place that is holistically approached and personalised to your individual goals and situation. 

Place yourself in the best position to purchase and grow a long-term, income generating property portfolio.

Call the Ramsey team today on 1300 001 215.