It’s usually the conversation at every weekend BBQ and in every group chat of your investment-savvy friends: “The market is moving fast.” “Prices are through the roof.” “If you don’t buy now, you’re priced out forever.”
In the Australian property scene, we are constantly bombarded with headlines about “hot” suburbs. But as a serious investor (even if you’re a newbie), you have to wonder: is the heat coming from genuine, long-term economic drivers, or is it just a temporary fever fueled by FOMO (fear of missing out)?
Differentiating between a high-growth opportunity and overpriced real estate is the hallmark of a sophisticated property investor. At The Harmony Group, we’ve spent over 15 years moving past the “vibe” of a suburb and digging into the hard data. To help you figure out if your local market is truly worth the price tag, let’s look at how to perform a proper real estate market analysis without getting lost in the noise.
The Mirage of the “Booming” Suburb
A market often looks “hot” because of a sudden spike in prices. However, a price jump in isolation is a lagging indicator—it tells you what has happened, not what will happen. If you enter a market solely because the median price jumped 15% last year, you might be buying into a peak.
To determine if property market values are sustainable, you need to look at the Days on Market (DOM). According to real estate data analytics, a significant drop in DOM is one of the most reliable real-time signals of a tightening market. If properties in a suburb usually sell in 45 days but are suddenly moving in 14, the demand is real. But even then, you have to ask why people are suddenly buying. Is it a new infrastructure project, or just a lack of stock?
True market health is found in the balance between supply and demand. If the number of new listings is dropping while the number of people attending inspections is rising, you’re looking at a genuine heatwave. Conversely, if prices are high but the number of properties for sale is also creeping up, you might be looking at overpriced real estate markets ripe for a correction.
Moving Beyond Guesswork: The 118-Point Reality Check
Most amateur investors base their market analysis of a property on three things: the median price, the rental yield, and, arguably, a “gut feeling.” While those are a start, they barely scratch the surface.
At The Harmony Group, we don’t believe in guesswork. We use a 118-point method that looks at everything from micro-demographic shifts to local government planning approvals. Why go to that extreme? Because a suburb can look great on a standard property market trend report while hiding significant risks.
For example, a suburb might have great historical growth, but our 118-point check might reveal a massive pipeline of new apartment approvals. This “shadow supply” can flatten capital growth for years. By analysing data points that others ignore—like the ratio of owner-occupiers to renters or the specific types of jobs being created in a 10km radius—we can see if a market has the legs to keep running or if it’s about to hit a wall.
The Co-living Edge: A Strategy for the Current Market
When a market is genuinely hot, entry prices can be high. This is where your strategy needs to be as sharp as your housing market analysis. If you’re worried about high entry costs eating into your cash flow, you need to look at property market insights through the lens of high-yield models like co-living.
Co-living in Australia is a massive opportunity for investors who find themselves in markets with high property market values. By taking a standard residential footprint and optimising it for multiple individual tenancies, you aren’t just relying on a single family to pay the mortgage. You are creating a “mini-apartment complex” within a house.
This strategy is a great hedge against an overhyped market. While a standard rental might offer a 3% yield in a premium suburb, a well-executed co-living property can often double that. It allows you to buy into those high-demand, “hot” areas while ensuring the property pays for itself (and then some) from day one.
Red Flags: When the Market is Just “High,” Not “Hot”
To avoid the trap of overpriced real estate, keep an eye out for these three red flags:
- The Single-Industry Spike: If a regional town’s prices are exploding because of one mining project or a single large employer, the market is fragile. If that project stalls, the market collapses.
- Vendor Discounting: Watch property market reports for the gap between the asking price and the sale price. If agents are having to discount by more than 5% to get a deal done, the “heat” is fading.
- Stagnant Rents vs. Rising Prices: If property prices are soaring but rental amounts are staying flat, the market is being driven by speculation, not by people actually wanting to live there. This is a classic sign of an overhyped market.
Trust the Data, Not the Hype
Gauging a market isn’t about following the crowd; it’s about looking at the data points the crowd is ignoring. Whether it’s analysing a property market trend to find the next growth corridor or using a high-yield strategy like co-living to maximise an established suburb, your success depends on the depth of your research.
Before you sign a contract in the next “hot” suburb, ask yourself if you’ve done a comprehensive housing market analysis. If you’re tired of the guesswork and want to see how the 118-point method can protect your capital, reach out to us. At The Harmony Group, we turn data into your biggest competitive advantage.
Disclaimer: The information provided in this blog is general in nature and does not constitute financial or investment advice. You should consult with a qualified professional before making any investment decisions.
