How to research the property market

Are you interested in researching the property market? Whether you're buying a new home, looking for an investment property or keeping an eye on your future options, researching the market is important. Understanding the trends of a potential suburb helps you in decisions on buying or selling property.

What is real estate research?

Real estate research involves assessing a number of factors on the current and future circumstances of a specific area. The property market in Australia is split up state-by-state and subsequently into smaller areas.

While some countries may be small enough to research as a whole, the size of Australia means there are vastly different markets across the country. House prices might be shooting up in New South Wales but falling significantly in Western Australia.

There are also considerable differences within states, particularly when comparing metro and regional locations.

These property market trends can come down to a range of factors, including supply and demand and economic and demographic trends.

Researching the property market means you can observe the trends in an area that you already live in or somewhere you want to buy to predict future patterns.

It helps you to judge whether your property will increase or decrease in value, where the best place might be to invest or the best place to buy your own home.

Where to research the property market

There are a number of property data sources where you can start researching real estate. A lot of useful research looks at what has happened in the past while many sites also offer "leading indicators" that examine what may happen in the future.

Companies such as CoreLogic, Domain and PropertyUpdate are some of the options for researching the property market. The Australian Bureau of Statistics (ABS) also has information about figures on building approvals, leading indicators and population. These may give you an idea of how areas are developing.

You can also check your area to see key statistics on population and compare with other areas.

Real estate websites such as realestate.com.au also allow you to look into a suburb's current property prices as well as the supply and demand and demographics of the population.

Finder survey: What features matter most to Australians when choosing a home loan?

How to research the property market

Supply and demand

Looking at the supply of housing compared to the demand is crucial in working out investment opportunities. You should source suburbs where demand exceeds supply, but it's not just about the figures.

You should also consider population growth, the number of building projects approved and the demographics of an area. These can have an impact on future demand.

Also, you might observe a vacancy rate of 10% in an area, but then notice that it dropped to 5% the following month. You need to think about why this has occurred and whether the change is as significant as it seems. For instance, this might be because of low population in the area.

Economic factors

Factors such as employment growth, average property prices and disposable income can also help you to analyse future trends. Areas with high employment growth and high disposable incomes mean people can spend more money on where they live and have more confidence to do so.

You can look at the Australian Census every 5 years to see each postcode's demographic data, such as wage growth.

Average property prices

Checking the current average property prices in an area can help you compare whether the price you are paying or being offered is reasonable. Look into other properties on the market and see the prices they are going for and the features they offer to go above and beyond the average price.

It might also help to go in-person to viewings and to drive around the area to get a feel for it.

Market cycle

Although it's not as important as you might think, you should consider the market cycle of the suburb you're looking at. Ideally, you would buy in the early stages of an upturn, but good investors will do well in both good and bad markets.

It is also helpful to look at gentrification, which can boost property prices. Many city areas that were once considered run-down have become "up-and-coming" suburbs with better amenities and new people moving in.

Residents' needs

Using the demographic data available about residents in suburbs, you can assess what properties will do best in certain areas. For example, if you know that the age range in the area is higher, you might want to check the accessible buildings and the right property size.

If you know there are lots of couples in their 20s and 30s moving in, look into properties with more bedrooms, backyard space and proximity to local schools.

Market data

Keep in mind that the statistics and data you review depend on your investment goal. You might be largely concerned with finding a market with positive capital growth while another investor may consider rental yields as the dominant factor.

Some statistics or market trends you may want to check include the following:

• Demand to supply ratio (DSR)
• Days on market (DOM)
• Ripple effect potential
• Vacancy rate
• Rental yield
• Auction clearance rates

How do I know when there is strong demand in a market?

The following could be indicators of a market where demand exceeds supply:

• Low DOM: If properties are on the market for a shorter amount of time compared to other markets, this may indicate that properties are selling quickly and that there is strong demand in the suburb.
• Little change in asking price: If sellers don't need to reduce their asking price to lock in a sale, this may suggest that buyers are competing against one another and are willing to pay a higher price.
• Properties are selling: If the majority of properties that go to auction sell, this suggests a positive buyer sentiment in the area. Also, if properties are advertised with "open inspection" times rather than private appointments, this means a high number of interested buyers.
• Limited available property: This suggests that buyers are snapping up properties quickly and that demand exceeds supply.

Written by

Rebecca Pike

Senior writer

Rebecca Pike is Finder's senior writer for money. She joined Finder after almost four years writing for business publications in the mortgage and finance industry, including three years as editor of Mortgage Professional Australia. She regularly appears as a money expert on programs like Sunrise and Today, as well as across radio and newspapers. She also holds ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products. See full bio

Rebecca's expertise

Rebecca has written 201 Finder guides across topics including:

• Home loans
• Cost of living
• Budgeting