Not all cheap areas are good buys, and a housing boom isn’t just about affordability - it’s about a mix of key factors.
Here are seven indicators that signal potential growth:
1. Population Growth – A booming market must attract more residents. If an area’s growth rate exceeds its 10-year average, it’s a positive sign.
2. Employment Growth – Local job creation (not just employed residents) is crucial. Strong job growth fuels demand.
3. Real Wages – Higher real local incomes support rising housing prices. Sectors like specialist trades, tech, and research drive sustainable growth.
4. Tight Supply – Housing shortages (less than three months of sales stock or <2% rental vacancy) push prices up.
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5. Undervalued Housing – Local investors snapping up properties and increased renovation activity suggest housing is priced below potential.
6. Demographic Mix – A balance of young buyers, upgraders, and downsizers sustains long-term growth.
7. Education – Proximity to top-performing schools can drive price premiums.
The X Factor: Unexpected catalysts - overseas investment, infrastructure projects, or economic shifts - can push a market into overdrive.
While some areas may still ‘boom,’ the post-Covid surge is unlikely to repeat.
For me, investors should focus on these seven fundamentals for sustainable gains.
