Why neighbourhood has never been so important when buying property

The coronavirus pandemic has forced all Australians to reevaluate how we live our lives.

Oliver LockdownOffices are shut, lockdowns are in place and people are now working at home more than ever.

Gone are the days where our ‘home’ was simply the place we rest our heads and enjoy some down time between work and our social lives – the coronavirus social distancing has put an end to life as we once knew it.

If social distancing and the Covid-19 environment has taught us anything, it has taught us the importance of the neighbourhood we live in.

If you can leave your home and be in walking distance of, or a short trip to, a great shopping strip, your favourite coffee shop, amenities, the beach, a great park, the recently implemented coronavirus restrictions might seem a little more palatable than if you had none of that on your doorstep.

Why is neighbourhood so important?

In short, it’s all to do with capital growth, and we all know capital growth is critical for investment success, or just to create more stored wealth in the value of your home.

Sure there is always the opportunity to add value through renovating your property or making a quick buck when buying well.

But these are one off’s and won’t make a long term difference if your property is not in the right locartion because you can’t change its location.

This is key, because we know that 80% of a property’s performance is dependent on the location and its neighbourhood.

In fact, some locations have even outperformed others by 50-100% over the past decade.

And it’s likely that moving forward, thanks to the current environment, people will place a greater emphasis on neighbourhood and inner and middle-ring suburbs where more affluent occupants and tenants will be living.

These ‘livable’ neighbourhoods with close amenities is where capital growth will outperform.

What makes a ‘good’ neighbourhood?

A good neighbourhood means different things to different people, but there are some key factors which help to determine which locations have the potential to grow in value faster in the future.

Neighbourhood2Generally, a good neighbourhood is determined on the physical location, suburb character and its close proximity to amenities such as a shopping strip, park, coffee shops, education, and even some jobs.

It’s obvious then that in our new ‘Covid’ world, people will want to be in a location where everything they need is in a short 20-minute proximity – whether that is on public transport, bike ride or walk – to their home.

In planning circles this concept is known as the ‘20-minute neighbourhood’.

Many inner suburbs of Australia’s capital cities and parts of their middle suburbs already meet the 20-minute neighbourhood tests, but very few outer suburbs do because there is a lower developmental density, less diversity in its community and less access to public transport.

The key criteria for a ‘good’ neighbourhood

Here is a list of 7 primary neighbourhood factors which have the potential to drive up property prices:

1. Close proximity to public transport

School ZoneNeighbourhoods with properties that are within walking distance to public transport, such as the train, bus, ferry or light rail, are popular with buyers and therefore are likely to add value over the longer term.

2. Close proximity to schools

 Some buyers will pay a premium to be in the catchment area for particular schools and as such, high demand generally means higher property price points.

3. Accessible amenities

 As we have previously discussed, a neighbourhood with all the local amenities you could want – parks, shops, restaurants, cafes, gyms, the beach etc. – would fetch a premium price for its local properties.

4. A low crime rate

 It goes without saying that a property in a neighbourhood with a low crime rate will be more valuable than one with a high crime rate.

5. It’s well maintained

Why neighbourhood has never been so important when buying propertyNeighbourhoods and homes which are well maintained and clean indicate a level of community care which can help add value to properties in the local area.

6. Planned upgrades which are beneficial

 Neighbourhoods with planned upgrades could be beneficial or detrimental to property prices in the area.

For example, improved public transport and any plans to make the neighbourhood more visually attractive (improvement to the appearance of buildings or footpaths for example) could increase property prices.

7. Any historic charm

Historic charm brings unique character to a neighbourhood that is often in demand by buyers and in the long term buyer demand for this type of area has the potential to translate to higher property prices going forward.

It’s all about the neighbourhood

Neighbourhood has always been a key factor to consider when buying an investment property, and now it’s even more important.

Location PropertyNot only do we already know that location does the heavy lifting when it comes to capital growth, with some areas fetching 50-100% greater capital growth than other locations, we’re also in unprecedented times which has forced us to adapt to a new normal.

This is a new normal where restrictions are put in place on our movement, social distancing has been implemented and your home now doubles as your office.

This is shining a spotlight on the neighbourhood we live in and what we have available at our fingertips.

As the world around us evolves and adapts, homeowners and investors must do the same and view properties with a post-pandemic eye.

Looking at the bigger picture remains key to your success as a property investor and now, whether you’re looking for a new home or to add to your investment portfolio, the right neighbourhood is absolutely crucial to success.

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Metropole

A perfect storm is brewing for our property markets in 2021-22, and you can trust the team at Metropole to provide you with directionguidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!  This will give you direction, results and more certainty. Click here to learn more
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.
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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


'Why neighbourhood has never been so important when buying property' have 2 comments

    Avatar

    November 14, 2020 Oliver

    Hi Michael,

    Thanks for the great advice as usual. Just had a quick question about these 20 minute neighbourhoods in Sydney. Currently looking for a first investment property in one of these 20 minute suburbs (Rozelle/Balmain), and in these past years there had been a push by the NSW government for increasing connectivity with the plans for 2 metro lines, Western harbour tunnel and beaches link, and the underground tunnel motorways. Would you say the tunnelling would have a negative impact on investing in these suburbs? We’ve already heard reports of noise and vibration, homes above the tunnels and nearby cracking, without any compensation by the government/ contracted tunnelling companies (despite the government promises) in suburbs such as strathfield, st peters and haberfield that have already had tunnelling for the m4-5 link. Arguably the tunnel under the peninsula side of Rozelle and Balmain is reported by the government to be quite deep at 50 over metres, but would this still serve as an issue as a lot of these suburbs are a 20 min neighbourhood?

    Importantly there is a property that meets all your 6 rules with owner occupier appeal, high land to asset ratio, ability to add value, etc, but lies in the path of the proposed western harbour tunnel. I’m concerned about the short term negatives whilst they build the tunnels in the next few years with noise, vibrations, etc, and the longer term implications if it would cause discounting of such properties and reduce re-sellability?

    Looking forward to your advice as always.

    Reply

      Michael Yardney

      November 14, 2020 Michael Yardney

      Yes tunnels and connectivity will be helpful to neighbourhoods – but only when they are completed – they can have short term negative impacts. It’s a bit like train lines or railway crossings – it’s good to be near them, but not too close.

      Reply


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