The Alpha Property Development Essay

Question:

You will be randomly allocated a post code area from AustraliaUse Marketing Theory to Identify the relevant criteria to use when describing the people living in this post code area.

Answer:

Introduction

This paper examines the market feasibility for mortgage investment in the housing industry by the Alpha Property Development Group. More specifically the focus on the New South Wales (NSW), a suburb of Sydney, Sydney Australia. The objective is to analyze the market and advise the Group whether or not to invest in the NSW's housing market.

New South Wales (NSW) market feasibility

This section addresses the location, and other marketing theory factors such as demographic, transport, marking performance of the Ultimo, NSW housing industry (Developer, 2017).

  1. Location

The Ultimo suburb, under the postcode 2007, is within the larger New South Wales city of Australia. It is located approximately 33 kilometres west of the Sydney CBD.

  1. Marketing theory factors
  2. Demographic factor

According to the Australian 2016 census, the Ultimo suburb had a population of 8,845 which was segregated as follows. Ultimo's median age was 27 years which was five years lower than that of the country (Australia). The suburb's age distribution, in comparison to that of Australia, is summarized as shown in the table below (Statistics, 2017).

Age Distribution

Ultimo

Average Australia

0- years

708

1464779

5-14 years

1013

2899829

15-24 years

1469

2988388

25-54 years

4713

7953789

55-64 years

415

2573729

65 years and over

527

3676763

Median Age

27

38

Table 1: Age distribution (Statistics, 2017)

According to the age distribution table, most residents of Ultimo are between the age of 15 and 64 years. At this age bracket, most people get employed for the first time and plan their lives especially starting their families away from their parents. Young adults think about having their own houses through either mortgage or renting.

Dwellings tenure

Ultimo

Average Australia

Owned outright

545

2565695

Owned with a mortgage

1107

2855222

Rented

3385

2561302

Other tenure type

35

78994

Tenure type not stated

163

224869

Table 2: Dwellings tenure in Ultimo (Statistics, 2017)

The table shows that most households in Ultimo own their houses through mortgaging (18.67%) and renting (67.58%). Conversely 10.88% house owners have used their savings to acquire them. The suburb’s dwelling tenure pattern is similar to that of Australia where many dweller acquired their homes through mortgages and renting.

Dwellings household composition

Ultimo

Average Australia

Family households

2361

5907625

Single households

1011

2023542

Group households

321

354917

Table 3: Dwellings household composition (Statistics, 2017)The table shows that most dwellers live as families followed by single households. The pattern is similar to that of the Australia. Therefore investing in the family and single households is viable.

Dwellings Household Income

Ultimo

Average Australia

Less than $650 gross weekly income

13.80%

20.00%

More than $3000 gross weekly income

18.50%

16.40%

According to the table, 13.8% of the households in Ultimo earn a weekly income of below $ 650 while 18.5% of the households earn a weekly income of at least $3,000. The rest of the population, i.e., 67.70% earn a weekly income of between $650 and $3000. The Ultimo's median rent stood at $458 compared to the State’s $300.

Transport

The Ultimo has several modes of transport in place. First, the suburb has a Central railway station which serves the Western and Eastern line, and the Darling Harbour. This shows that the suburb has a well-established railway network. Second, the suburb has a bus Broadway which connect the rest of the Suburb to the railway terminals. According to the 2016 census, 39% of the working population travel to their work places using cars (either as passengers or as drivers) while 61% travel using public transport (i.e., bus and train services) (Developer, 2017).

Housing industry performance in Ultimo

Sydney is considered to be among the best performing Australian markets according to 2017 (first quarter) industry performance. However, the marketing is facing pressure from financial lending restrictions which show the price of properties rises by 1.3%. The market is promising and is likely to yield adequate revenue (Macleary, et al., 2008, p. 45).

According to the Housing Industry Association (HIA) 2017 report, New South Wales was crowned as the strongest state with the highest scorecard. The state recorded strong population growth, growing demand for affordable houses and rising prices of houses. Other factors that have led the boom in the housing market are low-interest rates, strong exchange rate which attracts foreign investors, and affordable investment funds from financial institutions (emeraldinsight, 2017, p. 32).

The report also indicated that the number of first-time buyers increased by 8.4%. The growth is associated with the urge to own apartments and lowered cost of first mortgages. The report suggested that the trend for new apartments by young people is on an upward cyclical. It is suggested that the growth would reach a double digit by 2019 (Developer, 2017, p. 78).

Market segmentation and Targeting

Based on the demographic, transport and market performance analysis, the group should invest in the apartment which houses either families or single households. Young people are breaking from their nuclear families and are ready to rent or buy their houses. The targeting consumers should be earning a weekly income of at least $650. Most youths and young adults who are eager to own houses fall within this income bracket. Likewise, the group is looking for the shortest payback time on its cash outflow (Marshall, 2017, p. 95). Therefore, this segment is feasible.

Recommendation

According to the housing report, the NSW housing market is performing exemplary. Therefore the Alpha Property Development Group should invest in it. The group should focus on investing in housing units which would be offered to the consumers through mortgages and rent. The housing industry has a promising future, and with the growing population of young people in the Ultimo suburb on NSW state, the company should take up the opportunity.

Conclusions

The study examined the market feasibility for mortgage investment in the housing industry by the Alpha Property Development Group with an objective to analyze the market and advise the Group whether or not to invest in the NSW's housing market. From the analysis, which considered factors such as demographic, income, transport, population, and market performance, the Company should invest in the Ultimo suburb, New South Wales

References list

Developer, T. U., 2017. NSW Australia’s Strongest State In Housing Sector Conditions. [Online]
Available at:
[Accessed 28 08 2017].

emeraldinsight, 2017. Property investment and Finance. Journal of Property Investment & Finance, 35(5).

Hunt, S. D., 2017. Marketing Theory: Foundations, Controversy, Strategy, and Resource-advantage Theory. 1 ed. New York: Routledge.

Kotler, P. T. & Armstrong, G., 2015. Principles of Marketing. 16 ed. New Jersey: Pearson.

Macleary, A., Macleary , A. & Nanthakumaran , N., 2008. Property Investment Theory. 1 ed. New York: Taylor & Francis.

Marshall, R., 2017. Marketing. Australasian Marketing Journal, Issue 24.

Statistics, A. B. o., 2017. 2016 Census QuickStats: Ultimo. [Online]
Available at:

How to cite this essay: