Whether you’re buying a new home to live in or looking to invest, you’ll be familiar with the adage – location, location, location! Your property’s location is one aspect you can’t change – so it makes sense to understand what makes some suburbs so desirable, and how the area you buy in can influence the value of your property into the future.
It goes without saying that home buyers and property investors have a different set of criteria when assessing the desirability of a particular suburb or area. For both types of buyers, both rational and emotional factors will come into play – but owner-occupiers are primarily focused on affordability and lifestyle aspects, whereas investors will generally consider capital growth and rental yield.
While owners generally look at the attractiveness of a location in the context of their life stage and lifestyle, investors are interested in the likely return on investment a purchase will provide.
Whichever camp you belong to, choosing a great suburb to buy in will ensure your asset’s value grows strongly and outperforms the market.
What makes a great suburb for buyers?
Most home buyers will assess a potential purchase for its affordability and ‘fit’ with their lifestyle. A professional couple will have very different priorities to a young family or empty nesters – but while the importance of a property’s proximity to amenities like schools, shops and public transport will be influenced by the buyer’s life stage, ensuring your home ticks these boxes (regardless of whether they’re critical to you) will ensure strong capital growth.
Across the board, potential buyers usually consider a suburb’s access to:
- transport (trains, trams, buses and major arterials)
- education (from childcare through to university)
- dining and entertainment
- shopping (both local shopping villages and major shopping centres)
- medical facilities
- parks, sports facilities and beaches
Regardless of your lifestyle, life stage and personal priorities, it makes great sense to look to buy in a suburb that’s close to these amenities. If you’re priced out of your preferred suburb, look to the surrounding areas or consider if a townhouse or apartment could provide the lifestyle you’re looking for at a lower price point. Alternatively, buying off-the-plan may allow you to purchase a property in your suburb of choice by providing you with additional time to save while the property is built.
What makes a great suburb for property investors?
While astute investors will put themselves in a potential tenant’s shoes to assess a property against the aspects listed above, their ultimate driver is the return on investment they expect to receive for their rental property.
When assessing the attractiveness of a particular suburb, savvy investors will research the market to understand:
- local infrastructure – it’s important to have good access to quality transport and shopping
- educational options – proximity to quality schools will drive demand for your property, particularly if it’s zoned for a well-regarded public school
- rental supply and demand – it’s wise to avoid areas where there’s an oversupply, particularly if you’re buying an apartment
- vacancy rates – this is a good indicator of the strength of the rental market in that suburb
Generally speaking, investors are more willing than owner-occupiers to take a gamble on an up-and-coming suburb showing signs of gentrification – while they may not personally choose to live in that area, it’s likely to offer better growth potential than a suburb that’s historically achieved double-digit growth.
An investor’s reason for renting the property and intended investment term are other important factors. Is the purchase intended to be a long-term investment, or are you looking to improve and resell within a couple of years? Perhaps you’ve bought an existing property with a view to developing, and your priority is simply to obtain a short-term rental income that will cover the bills while plans and permits are drafted and approved.
At Castan Gilbert, we specialise in selling established and off-the-plan properties in Melbourne’s premier suburbs. Our extensive local market experience means that we understand what makes buyers tick, and can help you with purchasing a home that you’ll love – and one that will deliver strong capital growth into the future. Contact us today at 9827 1177 or firstname.lastname@example.org.