Property experts have revealed the three key factors that can determine whether a town or suburb is destined to be a future investment hot spot.

The where-to-buy decision is the most vital part of any property investment strategy and can mean the difference between achieving strong capital gains over time or being stuck with a stagnating dud.

According to buyer’s agents Rich Harvey, CEO of PropertyBuyer, and Kate Hill, from Adviseable, investors need to follow big infrastructure projects, be aware of ongoing population and demographic shifts, and have a strong understanding of an area’s micro-economy.

“At a simple level, I look for a suburb that’s going to have continuing population growth and also has the right demographic,” Mr Harvey said.

“What I mean by that is you look at a suburb that’s going to have strong demand with the aspiring upgrader or for people wanting a lifestyle change in areas where there’s limited supply but high demand.

“Demographic bias is also important. A certain area might appeal to a family group, or it might appeal to the LGBT community, or to young professionals – people with more money to spend, or higher disposable incomes.”

There are key growth factors that can be identified to detect a suburb’s future prospects. Picture: Getty

Another important consideration is an area’s access to employment opportunities, Mr Harvey said.

“Even now, with remote working so popular, people still don’t want to be too far away from the employment node and too far away from that people connection,” he said.

“The other thing is infrastructure, so shops, schools, public transport, hospitals – all of those things that make it a really great place to live and all on your doorstep.”

Mr Harvey said a great example of an infrastructure-led boom was in the Hills area of northwest Sydney when the opening of the M2 motorway in 1997 saw a 30% spike in property prices as travel to the area suddenly became faster and more efficient.

Improvements to accessibility can open suburbs up to a whole new pool of potential buyers. Picture: Getty

And he sees similar benefits for Frenchs Forest, in Sydney’s Northern Beaches district, after the opening of a major new hospital there in 2018.

“They’ve rezoned all the land next to the hospital and that will become a new town centre,” he said.

“There will be high density living, which will attract the older residents who don’t want the maintenance of a home, and that will free up housing stock for the younger generation.

“So, there’s a big opportunity for a demographic shift in that suburb.”

Getting into a suburb early before growth surges is a goal of many homebuyers. Picture: Getty

Ms Hill said sniffing out existing and funded new infrastructure projects was the most important factor in deciding whether an area was set for lift-off.

“It can’t just be a barren wasteland with a new estate,” she said.

“I’m looking at established stuff that’s there already, but then in terms of the future, I’m looking at roads, hospitals, airports, industrial parks, town centre redevelopment, that kind of thing.

“It’s a key factor to ensure that an area will thrive because that’s what brings people in and it’s what keeps them there and stops a transient population.

“So, a knowledge of upcoming infrastructure projects can really provide an awesome opportunity for property buyers.”

Ms Hill said another key component in an area’s future viability was its economic health and a diversity of local industry.

“The big-ticket items in terms of industry would be retail, education, manufacturing, health and education,” she said.

“It’s not a mining town that might be currently booming but has nothing else to offer in terms of industry.

“You also want an unemployment rate that isn’t going to make you recoil in horror. It should be tracking along at state average, ideally, or even lower.

“So, the economy needs to be healthy and diverse and there needs to be enough jobs for people. When that happens, they tend to stay around, they spend their money, they buy homes, they send their kids to school – they set up home there.”

Identifying areas where future demand is likely to rise is a way of getting in early. Picture: Getty

Population and demographics were also important factors, according to Ms Hill.

“If there’s a demographic change happening that can turn an area into a bit of a hot spot,” she said.

“Areas that are gentrifying, with little breweries and boutique apartment blocks springing up everywhere.

“When you look at that kind of changing demographic and you know who you’re buying for, then that can make an area really desirable.”

Source: realestate.com.au