One of the many facets of successfully sourcing investment properties is the demographics of the suburb you are buying in.
When researching locations, it’s so important to find out who lives in the area as this will give you a guide as to what types of properties are in demand. You could start by finding out the employment rate and average income level – the more people that are employed and the higher the income, the better, as residents can afford to pay more. This can push up rental rates and property values. Increases in migration and natural population growth in a region can also drive up pricing.
Locations with high unemployment should be avoided due to the higher risk of rental defaults and increased vacancy rates. Areas with a high percentage of renters compared to owner-occupiers should be avoided as it dilutes the rental pool and reduces capital growth potential.
Comparing census data over the years is also an excellent tool when narrowing your focus on suburbs. You can see trends in locations such as changes to employment type, e.g. blue-collar to white-collar, or changes in the mix of education in the suburb, e.g. an increase in university educated people.
These changes could indicate gentrification of a suburb is occurring or has already occurred.
Most real estate websites have some form of demographic data available however if you want to dig deeper, more significant data can be found here: www.abs.gov.au or www.home.id.com.au