Everyone knows that location is critical when selecting an investment property that will outperform. But what makes a good location and why are some locations better prospects than others?
When I started investing around 40 years ago, the emphasis for homebuyers was largely affordability and proximity to infrastructure. Many moved to the outer fringes of our capital cities which were developed in the wake of freeway extensions and commuting from vast, newly-born suburbs into the CBD became commonplace.
As far as amenities went, as long as they had nearby shops, healthcare services and schools, as well as relatively easy drive to their place of employment, life was pretty good. Today the property choices Australians make are still driven by lifestyle, but how we think and function In today’s world has changed. You see, with more than half of Australian households having only one or two people in them, more of us are:
- Choosing to start a family later in life
- Enjoying the opportunity to work flexible hours and fro home offices.
- Seeking better work-life balance and prioritising downtime before overtime.
- Opting to live within walking distance from not only infrastructure necessary for daily living, but also cafes, restaurants and recreational facilities, as lifestyle moves to the top of the owner-occupier and tenant wish list, alongside affordability.
- Downsizing to easily maintainable and cost-effective apartments and townhouses, with smaller gardens and more efficient, compact design.
A short stroll to success
All this means that “walkability” has become the new buzzword on the property investment block. Of course proximity to amenities such as shops, parks, and public transit that allows local residents to either walk or take a short train, bus or tram ride, has long underpinned property values in inner city neighbourhoods throughout the developed world. And now we’re witnessing a similar trend across an increasingly cosmopolitan Australia.
In fact, it’s common for a considerable premium to be paid for properties that are a short walk to the beach or café strops and long term capital growth figures show that in Sydney the city’s most “walkable” suburbs out performed the average by up to 20 per cent.
Lifestyle locations dominate
Yes, lifestyle has undeniably become the fundamental force in today’s residential real estate market. Culturally, we’re a nation that enjoys strolling to the local corner eatery to catch up with friends, or to leisure pursuits in the great outdoors.
It’s not only suburbs close to beach and bay that command premiums, but proximity to schools with a good reputation is becoming a must for family buyers. Some purchasers are paying extra to be within a particular school catchment zone so their children can either walk, bus or “train it” to school. In fact, in my experience, parents are more willing to spend more than half an hour to get to work if it means their children can safely walk to an esteemed local school.
Where it’s “at” – The café culture
It should also come as no surprise that s our lives become busier and time is in increasingly short supply, cafes have become a kind of transition point where we meet up with friends, family and often business associates for a “catch up”. Many city dwellers have their favourite haunts, where they’re on a first name basis with the local barista and have a “regular” order. The serving and consumption of coffee has become somewhat of a ritual and many of us fancy ourselves as coffee connoisseurs. Given that more of us are living alone or in smaller households, it’s not surprising that the relaxed, “home away from home” vibe of inner city cafes is becoming an increasingly popular draw card for those seeking a social outlet.
Australian cities ranked by walkability
As our population grows and our major cities increase in population by an estimated 10 per cent over the next five years, the walkability of an area will become an even more important consideration for property investors seeking locations that will outperform in the future.
And now you can find out how “walkable” a suburb is. Walkscore.com, which measures the number of typical consumer destinations within walking distance of a dwelling, with scores ranging from 0 (car dependant) to 100 (most walkable) has recently ranked most Australian cities and suburbs (this information is also available in most API state stories).
And the good news is that walkable neighbourhoods were recently recognised for their health and economic benefits afforded to residents by the University of Melbourne, where a 10-year study found good access to local infrastructure encouraged more people to ditch the drive and adopt “health-enhancing behaviours”.
For property punters, these cultural transitions that Australians are currently undergoing is important to note. It signals an end to the suburban McMansion “fad” and demonstrates just how crucial demographic waves of change can be to a planning and executing a successful, long-term property portfolio. While affordability will always be a factor in our property decisions, lifestyle is the fundamental key in our marketplace today.
Michael Yardney, Australian Property Investor, October 2014
