If you are buying an investment property, there’s a lot to consider.
Last year our pulse poll sought the opinion of investors as to what influences a property’s performance the most.
The majority (62 per cent) felt that location is the single most influencing factor for success.
What makes a good location?
When considering the location of an investment property, our ‘location-based’ investment rules are fairly straight-forward:
- Buy in established areas where there is existing amenity and character.
- Buy in locations where there are multiple pillars of economic support.
- Get as close as possible to ‘hard-core’ infrastructure – i.e. railway stations; hospitals; major retail centres and places of work. (And keep in mind, the closer to the GPO, the better).
- And ideally, buy in areas where at least two-thirds of the existing residents are owner-residents; so that when it comes time to resell, your property will have appeal to the largest market – owner residents.
But there’s another measure that has been gaining credence in the investor’s lexicon – that of ‘walkability’ of a neighbourhood.
The concept of ‘walkability’ as part of the investment equation, reflects the growing importance we place on lifestyle and work-life balance.
Culturally, we are becoming increasingly drawn to lifestyle precincts – the local cafes that serve as our homes away from home and area amenities that help to define a locale.
And it’s clear that these lifestyle hubs are becoming a significant force in today’s real estate market.
That’s where the measure of ‘walkability’ comes into play.
Walk Score (www.walkscore.com) measures the number of typical consumer destinations within walking distance of a dwelling, with scores ranging from 0 (car dependant) to 100 (most walkable).
The trend of using a walk score as a property indicator is becoming more commonplace in real estate circles, as investors seek out property that will outperform, and owner occupiers look to lifestyle precincts to complement their housing environments.
Overseas studies indicate that properties with above-average levels of walkability command a premium.
A study in the United States has shown that an additional one point increase in a Walk Score is associated with a potential $3,000 increase in property value.
Our study of 24 Brisbane suburbs also found a very strong correlation between a suburb’s Walk Score and a property’s investment performance.
We found that places with higher walkability achieved higher prices; grew faster in value; attracted higher rents (and rental returns); had fewer vacancies and less properties listed for resale.
Resale listings also sell faster in high Walk Score areas. Reportedly, Sydney’s most walkable suburbs – those close to the beach or café strips – have outperformed the averages by up to 20 per cent.
As housing markets increasingly attach a positive value to living within easy walking distance of public transport, shopping, services, schools and quality open space, a rule of thumb is to consider those locales with a Walk Score of 85 or more.