Property Investment Blog

New call-to-action
All Posts

Property Investment Strategies - Capital Growth

There is no way to guarantee that the property you buy will increase in value, but in order to increase your chances, you need to carry out detailed research on the property you are interested in and the suburb it resides in.

The capital growth property investing strategy is still very popular amongst property investors, and although the first few years of holding an investment property can be challenging, remember that capital growth can grow your equity if you invest wisely after carrying out thorough research.

Key indicators of capital growth


Indicators

How it can help you

Last 20 years capital growth trends and median property prices, for houses and units

Past performance of a suburb can help predict future capital growth

Average property days on market to sell time / auction clearance rates

Tracking this helps ascertain the current supply and demand for property in for a locality. 

Where demand for property consistently, over the long term, outstrips the available supply, prices will tend to rise.

The ripple effect

When the market starts a new phase of capital growth, prices often start to increase in the suburbs closest to the capital city centre first. 

The ripple effect then sees the wave of new growth ripple outwards over time to suburbs further from the city centre and to regional areas. 

Future developments of 
infrastructure or amenities

Planned improvements to an area, such as a major highway, schools, hospitals, transport and shopping centres, can lead to future capital growth due to:
Increased desirability of the location followed by population growth, increased employment and further investment.

Increases in income levels

As the average income rises in a location, so can the capacity of its residents to spend more of this disposable income on:

  • Local amenities, retail etc with flow-on multiplier effects which can 
    increase the desirability of a suburb.
  • Renovations and improvements on their principal place of residence
    or investment properties – improving the quality of properties in a suburb.

Population growth

Inward migration to a suburb can influence capital growth as when people arrive in a locality, they need somewhere to live straight away. 

Targeting areas with strong population growth and limited capacity for new housing, which can affect the levels of demand for property, can affect capital growth.

Rising weekly rental prices

This reflects high rental demand and the attractiveness of a suburb.

Low supply of vacant land for development

Less land available means fewer new properties to compete with existing properties. Where supply is constant and demand rises, prices tend to rise too.

Comparing median prices in
neighbouring suburbs

By identifying trends in these differentials, investors can identify gaps where suburbs can potentially catch up in capital growth.


Discover Australia's top performing capital growth suburbs with our free pack of suburb reports.  Download for free here.

No-one single factor can be seen as an indicator of capital growth. Thorough research of some or all of these factors can help you best predict whether a property you target will increase in capital growth over time.

Real Estate Investar members use Investar Search and RP Data, which are included in our Professional Membership, to perform extensive due diligence at a suburb and property level including:

  • Live market supply and demand analysis
  • Complete suburb profiling including rental income and growth trends
  • Property valuation estimates on any residential property in Australia 

New Call-to-action

Real Estate Investar Editor
Real Estate Investar Editor
Real Estate Investar provides intelligent software, tools and data to help you save time and make money in the residential property investment market.

Related Posts

5 Property Investment Strategies

The great thing about investing in property is that there are a multitude of ways that everyday investors can make money. There are different property investment strategies that can be used, depending on what your goals are and what you’re trying to achieve. These strategies can also be used on a range of different priced properties in different locations, meaning that there is always a strategy that you can use in most market conditions to help achieve some great returns. Here are five property investment strategies that you can consider using on your next property purchase.

6 Essential Members of Your Property Investment Team

Raising the initial capital to buy into real estate can be difficult for some investors, so can tempting to bypass identifying professionals whose help will be needed. Real estate investment is much like running your own small business. Whether you have 1 or 100 properties in your portfolio, you will need to make decisions about tenants, property management, and maintenance and keep thorough records of all transactions and dealings.

Find and Assess Subdivision and Development Sites Like a Pro [On-Demand Webinar]

Prospecting for new, feasible development sites is hard. Which is why Real Estate Investar is excited to be partnering with Archistar. We aim to make identifying and assessing small scale property development opportunities as quick, painless and accurate as possible. We are thrilled to be adding Archistar's deep-dive property development software to our already powerful suite of tools to make property development easier for investors. Level the playing field and use the same platform that Mirvac, Frasers and other major property developers are using to assess their next site! Real Estate Investar members will have access to the Archistar "Starting Out" package with the following features: National access Find Sites - search, site details, filter and digital planning library Map Visualisations - base package which includes zoning, overlays, heritage, building height, contours, flooding, bushfire and basic satellite imagery Assess Sites - quick estimate (residual land value) and due diligence reports Domain Listings and Suburb Insights Commercial Real Estate Listings