Conversely, factors that can increase levels of supply are developers building new, high density housing, or releases of land or house and land packages.
Is it a buyers' or sellers’ market?
Demand and supply within a market has a direct impact on price.
When carrying out your property investment research, there are many factors you can consider which will help you gauge the levels of supply and demand.
Average property days on the market - The average property days on market is the average number of days properties are advertised for sale before selling. Tracking these figures help ascertain the current supply and demand for property in a locality. Where demand for property consistently, over the long term, outstrips the available supply, prices will tend to rise.
How long your target property has been on the market for - Real estate that is taking a long time to sell can mean a lack of demand in the locality, which in turn can lead to motivated vendors and potentially discounted prices.
Vacancy rates - The vacancy rate is a numerical value, which which shows as a percentage how many properties are vacancy at any one time in a market. If there is an oversupply of property in a suburb, and the demand for it is low, there will be a high vacancy rate.
Levels of property price discounting - The vendor discount is the average percentage discount from the original asking price to the final selling price. Tracking this figure within a suburb can give you an indication of the levels of buyer interest and seller motivation within that suburb. For example if the level of discount is low, it means that demand is strong, so vendors may not have to discount very much (or at all) in order to sell their property.
Auction clearance rates (ACR) - is the proportion of properties put up for auction that actually sell. (learn more about buying property at auction here). In a suburb with strong demand, a higher proportion of properties will sell at auction than in a suburb with weak demand.
Proportion of renters - This figure, compared to owner occupiers, indicates the supply of investment property is a suburb.
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