Property investment in Melbourne continues to be popular across a broad cross-section of the market. However, without a solid strategy in place and some expert advice, you’re unlikely to reap a solid return on your investment. We’re going to reveal a few ‘home truths’ that need to be considered to ensure you yield the best possible results in your property investment journey.

Over the years, our research and experience has highlighted a number of things that are vital to successful investment.

1. Locality.

We all know this one. But we don’t mean the typical ‘locality, locality, locality’ mantra (I’ve never understood the need to say it three times?), nor am I pushing you towards the worst house in the best street; this is more about narrowing down to a general area that is likely to perform in line with your investment expectations and needs.

This means that if average prices in a locality decrease by 5% over 10 years, it is unlikely that your investment will double. However, this doesn’t necessary mean you need to invest in the suburb with the most growth.

Finding the best investment property and knowing where to invest in property requires a true understanding of your needs to achieve the appropriate balance of risk and return.

2. Analysis

Knowing what you need requires some nitty-gritty analysis of real numbers. Many property commentators agree that re-gentrification is an important consideration for a suburb’s increasing property values. But a casual walk down the main street to spot trendy new cafes will not suffice.

Impressions and anecdotes don’t give a true analysis of what is really happening across the locality. The variance in return that you can get from different investment properties is as big as a real estate agent’s ego but the formula to find a good investment endures. There are few key indicators required to help astute investors know where to invest in property.

Using these statistics, historically we have identified the areas most likely to outperform other localities, but with an important caveat: without taking large risks. Many areas with strong growth potential are also at risk of a significant market correction if there is a major economic or industrial adjustment such as a downturn in local employment or increases in interest rates; all of these are risks and can often be triggers for a loss in property value, particularly in growth areas.

3. Weighing it up

The formula works when the strongest lead indicator for growth is weighed against similarly vital indicators of risk. Where statistical analysis can identify localities most likely to see strong growth but remove those localities that are sensitive to market change, investors should enjoy an increase in the value of their investment over the long term, without the risk that short term values may decline past their original purchase price.

We have invested time and resources with financial service specialists to make this formula as accurate as possible. We continue to review our strategy, formula and analysis to ensure it is always relevant and changes with the needs of our clients. We would welcome an opportunity to share our insights with you further. Get in touch today.