The more you know about the most common mistakes that other property investors make, the better your likelihood of building lasting wealth.
In this series of short videos, Brett Warren and I discuss the common mistakes we’ve seen investors make.
Today we discuss why it’s wrong to invest in locations just because there are infrastructure changes planned.
Watch as we discuss:
We often hear we should invest where infrastructure is occurring because that increases property values but that’s just not true
As opposed to common belief, just because a new freeway is being built, or a new hospital is being constructed – capital growth does not necessarily follow.
You need multiple growth drivers to force capital growth – while infrastructure changes may create some short-term growth, they don’t always lead to long term growth
Sure improvements to infrastructure are important to the local economy and yes, freeways can lead to easier accessibility, but you need other drivers of capital growth to achieve long term, sustainable wealth-producing rates of growth.
There are many examples where new freeways to the outer suburbs increases accessibility, but didn’t increase property values.
A more important driver of capital growth is the demographics of the people who would be living in a location.
Look for areas where wages growth is above average as this leads to increased “affordability” – not because the properties are cheap, but because the locals will be able to afford to pay more for their properties
Of course there are many examples of good infrastructure projects which have increased property values including the light rail systems that have been built in Sydney or the tunnels that have been built in Brisbane.
On the other hand new hospitals are not particularly good drivers of long-term capital growth because the people who want to live near hospitals are not the type of people do not end up getting higher wages and therefore better “affordability.”