The 6 big mistakes to avoid when buying property. Mistake No.2 Buying in the Wrong Suburb
Welcome back to the six big mistakes to avoid when buying property! The second mistake is buying in the wrong suburb.
Once you’ve worked out which city is in the correct stage of the price cycle, the next step is to look at the suburb. If the city is the macro level, the suburb is the micro level. Different suburbs have different chances of success. You need to look at infrastructure at the micro, suburb level. Two things to look at are job creation infrastructure and amenities.
If someone builds a factory that requires 500 workers, there are not going to be 500 people already living in that area who can take those jobs. Typically, workers are recruited to the area and then need to find a place to live. This increases the demand in the area and therefore pushes the prices up. Amenities are things that make you more comfortable. If there is a new train station to be built on an existing line, that’s gold.
Why? Because many people who work in the city may not have a car park and rely on the train for transportation to work. Those people would not consider living in an area that does not have a train station. Once the train station is built, that area immediately becomes more appealing to those people and they start to move there. The same idea applies to new freeways, new shopping centres and new schools.
When we zoom into the micro level of infrastructure and amenities, we can see how it affects the supply and demand of properties. It’s economics 101 – when demand is greater than supply, you’ve got more customers than products and prices go up. When supply is greater than demand, the prices drop. This is why you want to get in at the start of a boom.
Whenever jobs are created, you’ll see a real estate boom. It’s logical, but you’re not necessarily thinking about it this way when you’re buying a house, are you?
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