Episode Details

The main one is one you probably haven't thought about. We often talk about price growth and supply and demand and the economy, but the one I'm going to share with you today may change the way you think about buying your next investment.

So hopefully, at the end of today's show, you'll have some clarity on the big influences and what we at Metropole research when we help make our recommendations.

Is this the most significant factor driving our property markets?

What is the little secret behind whopping price growth?

It's not the economy, even though that's important.

It's not supply and demand, even though that plays a role.

It's not infrastructure spending, availability of finance, or population growth either.

Although all of these things are important and undoubtedly impact our real estate markets, the truth is there is one major factor that drives property values more than anything else.

And that factor is homeowners or as we sometimes call them – Owner Occupiers.

Fact is: they own close to 70 percent of all the properties in Australia and therefore dominate our market and without them, it simply falls over.

So, it's interesting that while owner-occupiers are one of the most significant influences on property, they are commonly overlooked.

Here's a relatively current snapshot of the national property market according to the Australian Bureau of Statistics (ABS) and CoreLogic:

• There are 10.7 million residential dwellings Australia-wide with a total value of $9.8 Trillion Spread across around 15,000 suburbs
• An additional 130,000 to 160,000 new dwellings are added every year
• The total debt against these dwellings is $2 Trillion (giving an overall Loan to Value Ratio for residential property of just over 20%)
• Residential real estate makes up 55.6% of Australian household wealth
• Investors own around 27% of Australian dwellings by number, and 24% by value.
• There are more than 2 million individual property investors in Australia
• Each property investor in Australia owns an average of 1.28 properties

This is why I always give the following advice to investors who are searching for a strong property performer:

Buy the type of property that will appeal to owner-occupiers.

Owning a property with an element of scarcity that is located close to amenities, jobs, transport, lifestyle features and cultural, social aspects like cafés, bars, and arts precincts will always attract home buyers.

But these are features that appeal to tenants, too.

In general, the more established suburbs with better infrastructure, shopping, and amenities tend to be close to the CBD and the water and that's where the wealthy want to and can afford to live, and they're prepared to pay a premium to live there.

The rich do not like to commute.

Overall, by focussing your research on what those often-overlooked owner-occupiers are doing, you may just find an investment that outperforms the market and delivers strong value and growth over the long term.

The 7 biggest influencers of our property markets

Regardless of the economy, cycle, or market conditions, property is always a hot topic of conversation.

The reality is that the property market isn't an independent economy sector.

Rather, it's inextricably linked to a myriad of other financial, social, and political factors, all of which impact what your family home, or your next investment property, might be worth.

So, what are these factors?

1. Household formation

This oft-overlooked factor is actually more important than overall population growth because what increases the demand for housing isn't the number of people living in a city (or country), but the number of dwellings needed to accommodate them.