LOCATION, LOCATION, LOCATION! Is property price all about location?
You may have heard it said that making money in property is all about location, location, location. You simply have to buy the worst property in the best street, then renovate it to make a fortune!
It is not quite as simple as that, or we could all be property tycoons.
So, what are the factors that that affect the value of your property?
The big one is location. But… what is meant by location can be broken down quite a bit. At the top level your postcode or suburb name means a lot, but even within suburbs there can be differences.
Unfortunately, if you already own a property, the location is something you cannot change. But if you are in the market to buy a property then location is something worth noting.
Here are a few things that can greatly affect the current value of a property and its potential for future growth:
Views: Whether they are city views, ocean views, river views, or valley views, views certainly do affect the value of a property. Possibly the easiest example of this is apartment buildings. Generally, developers don’t want to create a ‘bad side’ so they plan the angle of the building to give each apartment a view even if it is side on. There is a development in Scarborough in Perth’s Western Suburbs that is a perfect example of this. The building is built in a U shape with the bottom of the U facing the ocean and the sides having north and south ocean views. The internal part of the U is the pool. The apartments at the bottom of the U directly face the ocean, so they are more valuable than those on the sides, but at least the two sides of the building still have some ocean views.
In apartment blocks the floor also has an effect on the price. We all know the penthouse is on the top floor because it has the best views. The one main exception to this is ground floor apartments that may have courtyards that are exclusive use, and thus they may be more valuable.
Apart from apartments, homes with views are also highly sort after, and people will fight hard to keep their view. You have probably head stories about big developers wanting to put a massive building somewhere and the locals being up in arms because it will block their views.
Views can be a difficult one to quantify. You may have a great view now, but can your view be built out? For example, if you are a few streets back from the beach and there is a vacant lot between you and the ocean what are the chances of a building being built in the future that blocks your view?
Before you purchase a property with views it is wise to check the local council rules and regulations on building heights for that area. You also want to make sure you stay informed if there are any proposed changes and your views could be at risk.
Most parents want their kids to go to a good school and it is amazing how much the reputation of a school can have on the property prices surrounding it. Perth’s best example is the Rossmoyne and Willetton Senior High School districts. Those two schools are very close to each other and have both pushed property values up in their relative catchment areas as parents fight to be inside of the catchment zones.
When the principal of Rossmoyne SHS Leila Bothams was appointed as the foundation principal at the new Harrisdale Senior High School in 2017, there was a lot of interest to see if she would cause a mini property price boom in catchment area around her new school. Harrisdale being a relatively new area we are still watching this one closely, but the early signs are good for the positive price growth in the area based on the new principal.
With school intake boundaries being drawn on the map, making sure the property you purchase is on the right side of the line can make a big difference to the value.
Access to public transport:
Access to public transport is a very good driver of housing price growth. The Perth suburb of Ellenbrook is a great example here. The WA state government have been promising a rail line to Ellenbrook for many years, and announcements from various political parties have affected the desirability of the suburb.
Where we live forms part of how we identify ourselves. Different suburbs have unique vibes that some people are highly attracted to. For example in Perth, Fremantle has a laid back vibe, whereas living in the Western Suburbs is a bit of a status symbol.
Beach, river, or forest front:
As I mentioned earlier, views are very valuable, however they can unfortunately be taken away by someone building in front of you. A property that is located in the front row on the beach or on the river front will not have that problem and thus is more valuable than a house just one street back. A property that has a common border with a national park or guaranteed bush reserve is also highly desirable as the feeling of nature on your doorstep can also not be taken away. However, it is important to check with the local government and planning commission to make sure that the area is guaranteed to stay forest and not be rezoned in the future.
Comparable houses in your neighborhood:
So back to my opening line, if you buy the worst house in the best street… yep it was that house that was bringing the price of the street down, but also the flip side may be true, you may have paid more for that house than it was worth because the quality of the rest of the street may have made that property worth more.
You can pick up some great bargains in this way. For example, there are a few suburbs in Perth’s northern suburbs that have a number of 4×2 houses on 600-700sqm blocks that are about 15-20 years old, but the rest of the suburb is being infilled with new smaller 3×1 or 3×2 houses on cottage blocks. Because the block size for the suburb is now a lot smaller the average price for that suburb has most likely gone down, the price of the 4×2 may have been dragged down which could actually make the 4×2 a great buy in regards of value for money.
It sounds crazy that access to quality internet could be a factor in the price of a property, but it certainly can. With the happenings of 2020 and the Covid-19 pandemic more and more people are working from home and relying on the internet. The pandemic has caused people to assess what they value and if the internet is not fast enough for them to work from home then it can be a factor in the desirability of a property.
Busy roads and quiet ones:
Again, it sounds kind of obvious, but living on a main road is less desirable than living on a quiet street. So, even though a house may be in a great suburb, it’s value can be diminished by its location within that suburb. I recently spoke to a real estate agent that used this as a selling point. His words were, “yes it’s on a busy road but look at the price, properties in this suburb of this quality, just don’t come up at this price. The only reason this one is priced so low is the busyness of the road.”
The challenge as a buyer is that you don’t always know everything about the property you are looking to purchase. You visit one at a home open on a quiet Saturday afternoon in January and all looks great, you buy it, move in then in February you find out it is on the rat run to the back of the prestigious private school that is 1 km away and from 7:30-8:30am everyday your quiet street is full of urban assault vehicles as the kids get dropped to school.
Location can be a very a large factor in the value you of a residential home. As professional valuers it is our job to take all the factors account when we provide you with a valuation.
If you would like some professional advice on the value of your home, or of a property you are looking to purchase please contact us on 1800 828 222.