The biggest mistakes property investors make : Location

We’ve all heard the adage: location, location, location, haven’t we? 

It’s almost the number one mantra of successful property investment!

But even though it’s a popular and well-known term, too many investors still don’t understand its importance.

So, I’d like to drill down into which are the very best locations to invest and which ones you should stay away from.

Land is no longer equal

In years gone by, the vast majority of Australians lived on the land.

And that meant that the value of land was pretty much the same in the regions and the cities.

Fast forward 50 or so years and our country was industrialising so we started to see a migration to the cities.

And as we know, that migration has now become a flood of new residents trying to squeeze into the eastern seaboard in particular.

In fact, new data suggests that Melbourne’s population is likely to double to nine million people in the next 40 years!

Which locations are best?

Australia has moved on from a manufacturing economy in the mid to late 20th Century to a knowledge-based one.

And that transition has had an impact on the locations that are now the most desirable.   

People want to live close to the things they like the best as well as within close proximity to transport infrastructure for their commute to work.

They also value time a lot more and so time to commute and to access lifestyle choices is important. 

But that doesn’t mean that everyone wants to live in the CBDs of our capital cities.

In fact, the inner-most locales of our biggest cities are generally the domain of high-rise apartments than attract a younger demographic so they don’t make ideal investments at all.

Instead, affordability needs to come into the equation.

But when I say affordable I don’t mean cheap!

No, I mean affordable to the type of people who can afford to live there.

Owner-occupier demand

It is owner-occupier demand that drives up property prices.

So, therefore, the locations where there is the strongest demand and desire to live by would-be homeowners make the best investments.

In these locations there are usually a number of desirable amenities, such as well-regarded schools, retail, lifestyle, transport and cafe precincts.

Walkability is also becoming increasingly important and will continue to do so in the years ahead. 

They are usually those types of up-grader suburbs that attract owner-occupiers with a high disposable income and the means to pay a premium to own property in that location. 

But the inner-city locations of our main capital cities, so up to five kilometres from the CBD, are already expensive so the potential for solid future capital growth could be constrained.

The values of CBD properties are also ever-changing as views can be lost when the next high rise is built or foreign investors who purchased with favourable exchange rates sell.

That’s why my pick for the best locations for investment grade properties in the years ahead would be those middle-ring suburbs about five to 10 kilometres from the city.

Those areas are most likely to experience increasing demand and gentrification as well as the potential to out-perform the capital growth averages.

And that’s what every investor is looking for, aren’t they?

Disclaimer

The article is general information only and is intended as educational material. Metropole Wealth Advisory nor its associated or related entitles, directors, officers or employees intend this material to be advice either actual or implied. You should not act on any of the above without first seeking specific advice taking into account your circumstances and objectives. 

from Property UpdateProperty Update http://propertyupdate.com.au/the-five-biggest-mistakes-property-investors-make-location/