Happy end of summer holidays, especially if you have children of school age. A pleasure and a challenge simultaneously, if your experience is anything like mine. This month I’m very pleased to be talking about a subject that is, in my view, badly under-discussed in the field of property investment - the importance of demographics, and particularly population growth, and how to harness them to choose good investment areas.
Let’s cover the bases first of all. You either travel (for investment property), or you don’t. Either way, some or all of this can still apply to you, unless you only invest within a 10 minute radius of home. If you live in a built-up area, within a 10 mile radius there can easily be hundreds of thousands of homes (or a couple of million, in London).
I’ve relied on good quality demographics from day one. I faced a simple choice from the start - at the time I got started in the early 2010s, local yields were drastically unimpressive. Even HMO didn’t look like it could even eke out a 10% gross yield, before considering any running costs. So, travel (of sorts) looked like the only way to take things seriously and do anything at scale. That led to the next question quite naturally.
Where, then (and why?). Just going to the best yielding area felt a bit too slack, and not robust enough, to be honest. Doing various amounts of research, and also relying on the market research of some large companies (so think “Waitrose effect” but that’s too late in the cycle, and tends to lead you to low yield areas) - and knowing that I could never replicate the sort of quality and depth of data that large companies would have access to - I started looking at local population forecasts (sometimes available via the local authority, but it varies from location to location), and also looking at planning applications and press releases about new larger investments (large for the area, comparably, rather than large by national standards - so looking at investment £ per head of population, rather than just ££££).
From that research I found a couple of areas nearby that were also well connected, and were “poor cousins” to a nearer-by city or significant employment area. I also removed any local biases (that took me a long time) and tried to put myself in the position of someone who was looking for their first house, and had a decent starter job but had to rent in x, to work in y, to one day likely buy in x, and then later down the track sell up and work in y (hope that makes sense!)
