Posted on August 5, 2021
How do I select the best area for capital growth?
There are a couple of drivers that help us identify areas that are likely to experience capital growth. Bearing that in mind, we can never tell what is going to happen in the future to any great accuracy. That’s why property research groups look at certain trends and observe what happened in the past under similar circumstances to identify what they predict will happen in the near future.
Similar to what seismologists do.
That’s why weather reports are generally on the money, but sometimes they get it completely wrong. So we can never ever be 100% sure about any investment.
History tells us that properties in all major city centres in Australia will generally double in value every 7 -10 years. This is a trend many investors are familiar with. This doubling of property values has occurred over several decades and we can assume that this trend will continue into the future.
A doubling of property values indicates growth rate of about 7%pa.. This growth rate is never consistent. Growth rates may be flat or even slightly negative over a four or five year period. Then suddenly we experience a growth spurt of 10% – 12% capital growth over a couple of years.
A lot of property investors try to buy and flip properties thinking they can benefit from these growth spurts. This method is highly speculative and this type of investor can often end up losing money due to high stamp duty costs, renovation costs, time and money wasted on interest charges and resale costs.
We are always better off looking to invest for the long run. At least a minimum hold period of ten years is recommended to hold property. In fact, I prefer never to let go of property and work on the ‘Cash Cow’ strategy of owning properties outright.
Owning property outright is part of a property portfolio building strategy which we are happy to teach.
Some of the other very important drivers that will determine if your property will experience capital growth will be improved infrastructure spending by local and state governments. This includes spending on transport routes, shopping precincts, schools, employment hubs, communication, sports facilities, etc.).
Our team of property experts keeps our finger on the pulse as to which areas are the best for your property investment requirements. Not only do we get updates from various research organizations, we keep our ear to the ground in our day to day dealings so that we know what is going on out there in the real world.
If you’d like any help in getting started, don’t hesitate to contact us. I suggest you download our free report for some really great insights.