Here’s how I conduct my property investment research

I was once asked by a journalist to explain which research tools I use to make my property investment decisions.

She probably thought I would quote the Australian Bureau of Statistics, SQM Research, Residex, CoreLogic and the like.

While I use these great resources, that’s not the answer I gave.

Here’s what I said:

Most research data tells me what’s happened in the past, but what I’m looking for are leading indicators, in other words I want potential predictors of what will happen in the future.

So I pay attention to:

1. Population growth — which will affect demand.

1. Construction numbers and future planned projects — which will affect supply
2. Demographic changes — I track suburbs where the residents have high and increasing disposable income — I’m looking for locations where owner occupiers can afford to and are prepared to pay a premium to live.
3. Employment growth
4. Consumer confidence — people don’t make big purchases like a new home or an investment property unless they feel secure in their jobs and are generally confident about the future.
5. Finance approvals trends — this is a good “leading indicator” — as many home buyers and investors get finance pre-approval a few months before they intend to buy a property.

The long term destiny of our property markets will be determined by two main factors:

1. Demographics — how many of us there will be, where we want to live and how we will want to live , and…
2. The wealth of our nation.

[adrotate group=”14"]

In the short term another factor is the availability and cost of credit.

In other words interst rates and how friendly the banks will be.

As I explained above, using Australian Bureau of Statistics data, I look for suburbs where people are able to, and prepared to, pay a premium to live because their disposable income is growing above average.

Then I get to know the real estate markets in those areas by analysing market trends — supply, demand, auction clearance rates, vendors asking prices, days on market etc.

And most importantly by inspecting lots of properties.

Originally published at Property Update.