It’s Valentine’s Day - that time of year when we’re compelled to reflect on our love lives. But, for those whose passions are more than just romantic and whose “heart is where the home is” we’ve examined your perfect property match instead.
Notwithstanding your personal style, the perfect property from an investment perspective is one with the following characteristics:
High capital growth
Capital growth refers to an asset’s increase in value over time. While it’s common for most properties to increase in value due to rising construction, material and land costs, like other assets and commodities, a property’s capital growth is also influenced by factors such as scarcity, and supply and demand.
The reality is fewer than 5 per cent of properties outperform the market in all conditions. In order to obtain an asset with a high capital growth profile, selection must be based upon a strategic and measurable process, taking into account a property’s past growth performance.
Factors like proximity to schools, a workplace or family members often influence a person’s selection when buying property. But, there are arguably more important aspects of location, namely those that impact a property’s long-term capital growth, you should also consider when selecting a property.
The perfect property is typically well-located, with respect to infrastructure, in well-established areas easily accessed via major road networks. Most suburbs provide a “village” or shopping strip offering local residents an outlet for coffee, food supplies, a general store and take away food, at a minimum, while more well-developed suburban villages provide sophisticated shopping facilities with trendy cafes, bars and lifestyle shops, in addition to gourmet or organic produce outlets.
Properties within walking distance to the local village benefit from greater demand. Though, avoid getting too close, as noise pollution, traffic congestion and the food odours wafting over your back fence can impact enjoyment of the property, and hence capital growth performance.
Other sophisticated facets of location include aspect, orientation, floor plan and levels of natural light, not to mention security, with each having an important impact on property value and performance.
Elements of scarcity
Seeking elements of scarcity in a property refers to aspects or stylistic attributes of a home difficult to replicate. For example, a stunning view, or period features such as those characteristic of Victorian or Art Deco properties. Like a rare coin, or a vintage car, scarcity drives value beyond construction costs. Dwellings with well-maintained elements of scarcity tend to offer superior performance, appreciating in value over time. However, like a relationship, these kinds of properties require love, support and a financial commitment to remain the very best version of themselves.
While Valentine’s Day means something different to each person, the science behind the perfect property match is universal. So, when selecting your next property, follow your head, not your heart and reap the potential benefits of a long and prosperous investment return.
Like investors, homebuyers should invest in professional, independent and customised advice, if required, to assist with their home purchase.
Authour: Greville Pabst
Property expert Greville Pabst is Executive Chairman of WBP Property Group.
Follow Greville Pabst on Twitter @grevillep