Will A Booming Population Means Another Property Boom?

Domain.com.au : 4 January 2010

That cliche is as annoying as “great opportunity to add value” (TRANSLATION: spend heaps of money renovating) or “wonderful chance to invest” (TRANSLATION: you won’t want to live here but some other sucker will rent it from you).
The real reason “location, location, location” makes me so crazy is because it is frustratingly, universally true.

No matter which street, state or suburb a property is in, the best located property always wins.
As a property writer, I find this a little boring and predictable. I love stories about areas like Redfern and St Kilda that start out as slums but miraculously turn into sought after locales. When Toorak or Vaucluse mansions break yet another predictable property record, I find myself yawning.

Well-located properties attract premium capital growth and the best rental returns because demand remains strong, regardless of market conditions. And let’s face it, most people are sheep and we all like to live in the “best” areas.
We all have wants, prejudices, price-restrictions and the power to decide which property locations we wish to live in — so most of us go with what we are familiar with.

But now that the population is growing so fast — we added another half a million people in the year to March 2009 — quality locations could become even more popular (and pricey), forcing us to seek similarly located properties that smidge further away.

Australia’s population growth is the talk of the international community, with this country’s population predicted to be one of the fastest growing industrialised nations in the world, according to the Population Reference Bureau.
Interestingly, property economist Jason Anderson from forecaster BIS Shrapnel, says it won’t be property prices that will grow on the back of booming population growth so much as rents.

“Most immigrants will not be prepared to pay the price premium of the inner ring and I think values will be stronger in the middle and outer ring suburbs of capital cities,” he says. “It’s rents that will grow rather than prices.”

Anderson is forecasting Sydney rents to rise by between 8 and 10 per cent next year, with Melbourne and Brisbane rentals growing by 6 per cent.

That also means more of us may start searching further afield for affordable properties, with more Redfern and St Kilda stories happening in Australian suburbs that start to gentrify. And if Anderson’s right, this could happen in the suburbs further away from our inner city suburbs, where prices, space and land are that bit more attractive.

But what makes one real estate location better than another?
PROXIMITY TO EMPLOYMENT: Employment opportunities are the prime location drivers in property, which is why places like the Northern Territory and Western Australia have been growing so strongly in both price and population. Being near economic and employment opportunities is the prime driver of property prices and rents. After all, how else can property prices rise if people aren’t earning better incomes to pay for them?

SURROUNDING INFRASTRUCTURE: People rarely make property choices based merely on the four walls of the actual house. In fact, the schools, roads, parks, cafes and shops around those four walls are usually more important than the house itself, hence the value of location. You see, property values are rarely about the bricks, timber and materials of the home but more about the land value of the location. That’s why apartments in the inner city can be worth more than a house on a quarter acre block further away from the city – the apartment attracts a location premium that the house cannot.

LIFESTYLE CHOICE: The lifestyle you live is the most important determinant of location – if you’re single and work in the city then a home close to work, friends, restaurants and going out is probably important. If you have small kids, the suburbs might be calling your name and you probably want something close to work and schools. If it’s a seachange you’re after, then being close to the beach or the bush might be more your thing.

Equally, there are a whole bunch of things people never want a property to be close to – things like nuclear waste dumps, power lines, busy roads and even police stations (we all want the police to protect us, but not all of us like them around the corner from home!).

There’s now refined search tool on Domain.com.au that allows buyers and renters to find the best located properties online.While you can still search like a Luddite if you choose, you can actually set up a Radar search to seek out the best located properties according to your personal criteria.

If it’s restaurants you want to be close to, you can ask for properties within 500m of restaurants. If it’s train stations, then you can set up that search, too. Oh, and if you want to be away from those rubbish dumps, you can key that in too.
Easy! Well, it would be … if we weren’t all so obsessed with living in the same great locations as everyone else.