By Rich Harvey, CEO & Founder, propertybuyer.com.au
If you have even a passing interest in property, you’ll have heard the adage that the three most important things in real estate are “Location! Location! Location!”.
It’s a clichéd catchphrase bandied about by amateurs and experts alike – but there’s a good reason it’s such popular wisdom… and that’s because it’s true.
But what characteristics actually define a good location?
There are multiple data points that analysts and advisors rely on when making their decisions, but I like to look at some of the more qualitative stuff.
Here are five elements we look for when choosing a great location with excellent potential for long-term value growth.
1. Walkable lifestyle
Have you ever driven to a popular café strip, beach or park only to spend an inordinate amount of time hunting for a carpark? It’s frustrating, isn’t it? You’ll curse under your breath watching someone being seated at your favourite table while you make a seventh lap around the block.
The truth is you’d visit more often and stay longer if only there wasn’t the hassle of car travel.
Well, I can tell you that property owners who are within a short stroll of those facilities are sitting on very desirable real estate.
Locals who walk down to the shops to have a coffee, pick up some delicacies, stroll on the sand or take their dog to the leash-free park are loving the options their suburb delivers.
I’ve had discussions with other professionals and we tend to agree that a five-minute walk – or about 400 metres of not-too-hilly terrain – to a popular destination is the sweet spot for premium property.
2. Easy transport
Yes, we are a nation of car drivers due to the vast distances we must travel here in Australia. Most of us have grown accustomed to spending time in the vehicle.
But property close to great public transport options thrives in terms of capital growth potential.
A train, tram, light rail or bus helps bring our suburb “closer” to all the facilities we like to access. If you can easily hop on a mode of transport and be shuttled over to your desired location with minimum fuss, that’s an absolute win.
It’s a big part of why some more regional locations thrive while less connected suburbs on the city fringe might struggle.
Also, great local facilities tend to spring up around transport hubs. Retail and services like to be where the people congregate and these outlets are another driver of real estate demand.
3. Lots of homeowners (especially families)
Suburbs where there are more homeowners than renters tend to do better over time when it comes to property value increases. This seems exponentially so when those owners are families seeking houses. You can check this ratio for each suburb on the ABS website.
Now I’m not suggesting homeowners are more desirable than renters to have as your neighbours. Both groups are a mix of folks that can be positive or negative to have living next door.
No, what I’m talking about is more the economics of homeowner-dominated suburbs.
Firstly, owners will spend more capital on improving their homes. Painting, landscaping and other upgrades all contribute to a home’s appeal and elevate the desirability of the area overall. These works also help raise a property’s value. If enough of them do the work, watch the suburb’s median house price increase.
Also, homeowners tend to reside for longer at a given address compared to tenants. This establishes stronger community ties. The result is a heightened desirability for an area that increases its cache for not only new residents, but businesses as well.
4. Building and renovation activity
There’s nothing like renovation and construction to create buzz in a suburb.
Construction activity shows a suburb on the grow. Whether it’s new construction, renovation, added dwelling units or a raise-and-shift, construction means progress and the willingness of property owners to invest their capital.
Now – this growth indicator is most applicable in already established suburbs in higher-density population areas. A hive of construction activity in new housing estates is to be expected, so it isn’t necessarily a flag of assured capital gains.
Next time you are in a suburb that interests you, take note of the number of builders active in the streets.
5. School zones
Last but most definitely not least is desirable school zones.
Parents want to ensure the very best educational experience for their kids. This means those desirable schools in the public system that require students to reside within a catchment area are helping drive up property prices. Family buyers will pay a premium to make sure their kids are guaranteed a spot at the local school.
This applies to private schools too. Communities form around great schools and parents again want their offspring to enjoy the benefits. Being within easy access of their school means less trouble getting to and from school and associated activities. It also allows the family to be part of the school community fabric. Ask any parent who lives close to the school gate and they’ll tell you – the kids love to have friends over, and this leads to harmonious interactions with parents.
Yes – school zones are a defining factor in premium property price growth.
Choosing the right suburb based on great fundamentals looks simple. The truth, however, is that to understand locational real estate value drivers, you need intimate knowledge about a suburb. You gain that sort of insight through ongoing engagement and buying experience in the local market.
If you’re thinking about buying your next home in a great location, why not contact a buyer’s advocate to represent your interest? They can give you the absolute lowdown on their areas of speciality. It’s the best way to ensure you lock in on the ideal property in a dream suburb.
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