8 Tips for Finding Out What the Market Needs (Part One)

Property developers need to know their market inside out. Steve Chandler can show you what to look for in yours.

As far as the market’s concerned, property development works just like any other business. You’re creating a product that you want to sell to the right people. Obviously, the key question here is who those people are.

Before you even start a project, you must know exactly who you’re completing it for. This is the only way to make sure that you can sell the property for the highest possible profit.

However, finding out what your market needs can be quite complex. And the costs of property development are way too high to leave anything to guesswork. This is why you need to know exactly what you’re selling and to whom.

On the bright side, here you’ll get a chance to learn from one of the most reputable figures in the industry. As a successful developer for more than 35 years, Steve Chandler knows what the market wants. Here are some of his most valuable tips for identifying your market’s needs:

1. Know the Difference between Needs and Wants

The property that you develop will have many different features. Some of them will be essentials while others are nice-to-haves. Knowing the difference is crucial to making sure that you meet the market’s expectations.

Things like toilets and sinks play to people’s basic needs, which your property must feature regardless of the market. Aside from this, taking into account people’s desires can make a world of difference to how quickly you’ll get your development sold and for how much.

The only problem is that the line between needs and wants isn’t always very clear.

Take for example swimming pools. If your development home has a pool, people may want it but they probably don’t need it. It may be an additional cost that they’re unwilling to pay, and thus, doesn’t contribute to your profits. However, there are areas where you might not even be able to sell a house without a pool. Something that’s a luxury to some could be a must-have for others.

This is why you need to carefully analyse your target market. Which brings us to the next point.

2. Take a Close Look at the Demographics

For any sort of market research, your first step should be to look at the demographics. These statistics can give you a wealth of information that you can use to find the right development project.

Take population growth as an example. Obviously, it’d be best to find the fastest-growing areas and develop there. But you should look at other factors over and above the growth percentage. For example, you’ll want to know the average age of the population. This can tell you many things on its own. 

These include proximity to different amenities and the structure of your residential development. In addition, it tells you the structure and age of families that live in a certain area. This can be vital to creating apartments that have the proper structure.

The good news is that this information is easily accessible and shouldn’t take you long to find. You’ll then be in possession of some of the most important information about your market.

3. Look into Your Market’s Financials

This factor plays a bigger role than most others. The disposable income of your target market says a lot about the features that your residential property should have. It also gives you a rough overview of their lifestyle, which is another critical component.

You need to take a look at your market’s discretionary spend. This includes everything on top of the basic necessities. In addition to this, you should also take a look at their average savings.

This is because they might be able to afford higher-end properties if they have some money put away. Either that or it could indicate that you can sell the properties that you’ve developed in short order.

On the flipside, your market might have trouble saving and low disposable income. In this case, you’ll have to make certain arrangements to make it easier for them to buy. Due to the risk that comes from a lower deposit, you might have to find some sort of insurance.

There are many decisions that you can base on your market’s financials. Make sure to examine them closely to avoid costly mistakes.

4. Access Recent Sales Data

If you look at the above factors, it will be easy to figure out the demand. But that’s not all that you need to know. You’d also want to confirm this projected demand.

The best way to do this is to take a look at recent sales. See what’s been selling and for how much. This will give you a good idea of what you should develop. In addition, it will show you the price range that you should stick to.

This is a great way to cement all of the information gathered. The median price often encompasses demographics, financials, and many other factors.

To get recent sales data, you can turn to an agency that sells them. You might also be able to find it in some government databases, which are usually available for free. Make sure to look up this information as it can give you lots of valuable information about your market.

More to Come in Part Two

You wouldn’t want to miss the additional tips in the second part of this article. Make sure to take a look at it so that you have all the right information.

Meanwhile, if you need help finding out what the market needs, Archistar has all the tools you need. Instantly assess market and sales data for any suburb in Australia, sourced from CoreLogic and Domain.

To see Archistar in action, schedule a demonstration.

This content comes courtesy of Steven Chandler of the Property Development Institute. Steve Chandler is a third-generation property developer with over 35 years’ experience. He is a lecturer at two of Australia’s most recognised universities and travels Australia delivering property development training at introductory and advanced levels. Steve has also authored a number of books on building and property development.