Selecting your area
Selecting your area is not enough. Photo – Canva.
  • FOMO is driving buyers to overpay in a rising market
  • You can’t assume that all property will grow equally
  • Don't adopt a mindset that 'any property will do anywhere'

It’s one of those questions that I get asked the most. What area should I buy in Kate, which area are you buying in for everyone, Kate?

But it doesn’t actually work like that when you’re investing in property, there’s a lot more to consider.

Whenever significant property price data is released – which we’re getting a lot at the moment because the property markets are doing so well – there are masses of news stories about what is happening in markets around the nation.

Often the data will show median price increases at the suburb level, which motivates some buyers into buying in those locations because they believe they are a safe bet and set for even more price growth in the months and years ahead.

FOMO is driving buyers who are overpaying

Lately, FOMO, that fear of missing out, is driving some buyers to overpay for properties.

Strategic property investment – whether for a home or a rental property – involves buying before prices start to increase in any meaningful way such as before or at the start of rising market conditions.

With markets firming in many parts of Australia at the same time at present, some buyers might purchase a property in any old location expecting superior price growth to automatically occur.

Unfortunately, this won’t necessarily be the case, because area selection is only one part of a strategic property purchase.

Likewise, in times of strong market conditions, the dreaded spruikers return (not that they ever went away) and convince far too many unsuspecting victims to buy inferior properties at inflated prices by using fear of missing out as a sales technique.

We have always been quite open about the areas where we help our clients buy a home or investment property.

That’s because we have no issue sharing this information, and because there are many other fundamentals that must be met before we make recommendations on properties in any location, especially if purchasing interstate.

Most people understand their own suburbs quite well but become less familiar as the distance from their own neighbourhoods increases.

This lack of knowledge often puts them off buying somewhere that might be more appropriate for them (which, of course, is where professional buyers’ agents can assist.)

People often only buy in their own neighbourhoods – even for investment purposes – based solely on the fact that they “understand the area” or, even worse, “so they can keep an eye in it”, which, again, is not necessarily the best strategy for them.

You can’t assume that all property will grow equally

Within every suburb, there are superior and inferior locations, due to elements such as geographical features, traffic noise, development zones, school catchment areas, and natural risks such as flooding or bushfires.

On top of these, you’ve got further unseen factors such as the location of housing commission properties, local stigma, or plans for significant unit development, which can negatively impact future price growth.

So, within each suburb, you must research which are the best pockets to buy property in.

Then you need to assess which properties – either on or off the market – are the ideal ones for your needs, and your portfolio including budgets, as well as your property hopes and dreams.

So, you can’t take a scattergun approach here or adopt a mindset that any property will do in any location because property ‘always rises in value’. It doesn’t !!

While history shows us that Australian property prices have been resilient and have experienced steady capital growth over the decades, there are always periods of flat or even falling market conditions that follow.

This means that some buyers who buy at the peak of a market or purchase a property in an inferior location may have to wait a long time to see any substantial capital growth.

Of course, the ideal scenario is purchasing a property in the best pocket of a location that is also primed for superior capital growth over the medium to long-term as well as one that meets the needs of your family or your investment strategy.

This is meant as a cautionary tale, a word of warning to not get too complacent in these times of almost universal property growth. Be careful.

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