How to Start Property Market Research in 2023

What is property analysis?

Property analysis is the process of gathering information about a property prior to making an investment decision. Property market intelligence is important when ascertaining how a property stacks up in the wider frame of the local marketplace. Before making any financial decisions on whether to purchase, hold or sell a house, an in-depth property analysis should be performed. 

Good property market research involves the gathering of information from several sources, as well as verifying that all data is accurate. This information typically includes: 

• Housing market research into demographics, geographic and socio-economic data. 
• A look at the physical characteristics of the property, including square footage, physical design and current condition. 
• Basic cost information, including purchase and potential renovation costs. 
• Revenue information to ascertain whether a property offers good rental yields or ROI. 
• How the property compares to others in the area in terms of condition, age and amenities. 
• Financial specifics, including potential loan amounts, current interest rates and overall purchase costs.
• Current property market trends, and changes in the market as a whole.

Buy-to-let investors, developers, estate agents and many other groups should all be familiar with the tools needed to research to property market.

Market research is important will allow you to make better comparisons between areas and properties, which will be helpful whether you are making an investment or looking to sell a property.

How do I start researching real estate markets?

The purpose of real estate market research is to establish whether to invest in a specific location. There are several easy ways to perform detailed research of local real estate markets, and your first step should be to consult historical data from a variety of sources. 

To understand where a local real estate market is potentially headed, you’ll first need to know where it has previously been. PropertyData provides a wealth of tools which allow access to historical property information by postcode, including previous sale prices and valuations through the years. 

Narrow down a neighbourhood or region by postcode

Property investment is location-based - after all, we’ve all heard the saying “location, location, location”. When identifying areas of a potential investment, you’ll want to consider pricing, rental demand, available stock, demographics, rental yields and amenities in the area, among many other things. PropertyData provides up-to-date analysis by postcode to help you create a shortlist of investment areas.

Analyse the area in more detail

Once you’ve narrowed down areas of interest, it’s time to look at them in more detail using our Local Data tool. You should look for example at prices (including £/sqft) and demand for rental housing in the area, as well as delving into construction levels, economic information and business performance of a region.

Demographics (such as the age of population) will also be a good indicator of how an area is performing economically. For example, if the average age of people in the area is getting younger, you can probably use this as a sign that young professionals are following commercial opportunities and taking an interest in the area.

Areas which aren’t attractive to renters generally command lower rental yields, so ideally you’ll want to be aiming for an area which is in high demand among students and young professionals (the largest demographic of renters).

You might also want to consider potential future opportunities, too. For example, is there any outward investment planned for the area, such as a new business park or place of higher education? These are all positive signs that demand for rental housing could soon peak in an area.

Understand the stock in the area

Once you've identified an investment area, look at the existing stock in that area and how different property types and sizes perform.

• The average size/square footage of properties in the area. 
• Number of rooms (bedrooms, living rooms, bathrooms and so on). 
• The age of properties in the area (are they older, newer or a mixture of both?)
• Do new builds command a higher price tag?

Look for due diligence issues

Spotting warning signs is important. For example, have there ever been any environmental issues or soil contamination issues in the area? Is the area prone to flooding? Are there any external factors which could affect property prices, such as the proximity to undesirable processing plants or correctional facilities?

Are there restrictions on development, such as the property being in the green belt or an AONB?

What next?

To supercharge your property market analysis, why not sign up to PropertyData for a free 14-day trial?

With a wealth of information to hand, you’ll be able to value properties, calculate rental yields and define potential opportunities for investment in an efficient manner.