Taking an integrated and long-term approach is key when it comes to narrowing down your home buying choices to find a location that will suit your lifestyle.
Step 2 of 6 in the Home Buying Guide
Table of contents
- Geographic location
- Climatic conditions
- School zone
- Proximity to work
- Socio-cultural factors
- Suburb character
- Reliance on industry
Identify your priorities
Once you’ve reviewed your lifestyle and financial status, and decided that you’re in a sound position to settle down and purchase a home, it’s time to start thinking about location.
We’re all familiar with the maxim “location is everything” paradigm. How your property location fits into your lifestyle is one of the most important decisions you’ll make in the home buying process. It’s a matter of balancing your priorities and finding a suitable location that will match your needs and improve your qualify of life.
The location of your home will not only influence the future value of your investment, it will also shape many facets of your lifestyle and your financial health.
In Section Two of the Home Buying Guide, we take a look at some of the major considerations you should include when analysing, researching and selecting potential suburbs for your next property purchase.
When researching different property locations, there are many factors to consider. Do you want to live in a trendy urban area or the inner city? Do you need to be in a particular school catchment zone? Does the suburb have the security and ambience that you’re after? Is the area well connected with transport links and infrastructure?
Below we outline some major things to review when deciding how valuable a location could be for you.
You need to carefully consider the geographic location of your property and how this will satisfy your lifestyle needs, particularly if you intend to stay there for an extended period of time.
Whether you’d like to live in the central business district (CBD) of your chosen state or in more regional area, it’s important that you think about how the geographic location of the area will affect your lifestyle. Does the area suit your needs in terms of current and future job opportunities? Is it close to transport services? Are there public amenities nearby?
Think about the main suburb types in Australia and how each of these could complement your lifestyle:
If you’re a young professional and you want to be amongst the hustle and bustle of the city, you don’t own a vehicle, and you value the convenience of being able to walk to bars and restaurants, then choosing an inner-city location could be the right decision for you.
If you want to live within close proximity to the CBD, but can’t afford the inner city price tag, and would prefer to live somewhere with a little more peace and quiet, then an urban suburb may be the right move.
If you have kids or pets and you need a large outdoor or entertaining area, then a property in a family-friendly suburb may suit your lifestyle needs.
If you work from home or in a rural area and you value solitary and independence, then settling down in a rural area could be your best option.
When contemplating a new location, you should think about any climatic conditions that could influence the liveability of the area. Is the area prone to bushfires or flooding or any other potential hazards?
If you suspect that the suburb may be prone to an extreme weather condition, speak directly with the local council. You can also find useful information on the Bureau of Meteorology website.
Bush and grass fires often occur near busy roads and highways. If you think the area is prone to bushfires, speak to the local council immediately. The governing council can provide you with land maps which identify bushfire prone areas, including associated buffer zones.
The council can provide you with information about fire danger ratings, fire safety fact sheets, and details about the development system they have in place in order to protect human life and to minimise damage to property caused from bushfires.
Some state governments also have mobile applications, such as the NSW Fire Near Me smartphone application, which can provide handy information about fire risks.
If the suburb is situated in a coastal area or close to a major waterway, it may be vulnerable to flooding. Most state governments have coastal and estuary management programs designed to provide safety information and improvements for residents living within flood-prone areas.
They can also provide zoning maps to identify whether or not the suburb falls within a flood-prone region.
For most Australians, living in an area that is within close proximity to amenities and services is essential not only for lifestyle convenience but also in terms of selling your property further down the track. A property that is within close proximity to the central business district (CBD) and public amenities such as schools and parks, will generally be easier to sell should you decide to move on in the future.
Think about the type of amenities that are important to you (and may also be important to future buyers). Is the location near a train or bus station? Is there a nearby child care centre? Are there local businesses nearby such as supermarkets, pharmacists, medical centres and banks?
If you have kids or you’re planning to have kids in the near future, the school catchment zone is an important consideration. When looking at unfamiliar suburbs, check which school catchment the property falls under.
Even if you’re kids are in primary school now, don’t forget to check out which school zones the suburb is in for secondary schools too.
Residing in a good school catchment zone can push up property prices over time (which can be beneficial when it comes time to sell), and it can also ensure that your kids get into a reputable school.
The length of your daily commute can impact your disposable income (longer trips mean higher fares) and the quality of life, so you need to think about the length of time that you’re happy to commute each day.
How close to work do you want to live? Do you travel overseas for work and therefore need access to the airport or train station? Would you prefer to travel via private vehicle or public transport? Can you avoid road rolls if you’re travelling by car?
For many homeowners, the socio-cultural elements of a suburb are a key consideration when choosing property location. Does the suburb feel safe? What are the neighbours like? Does the suburb have a low crime rate? What’s the unemployment rate? What is the dominant spoken language in the area? If you have religious needs, are there nearby churches in the suburb? If you value health and fitness, are there nearby gyms?
Find out how murder can affect property prices.
The character and ambience of the suburb can be an important factor to think about when reviewing different property locations. What’s the vibe of the suburb? Are people friendly? Is there a sense of community?
Jump on the local council website to see what community events are coming up, check out the local newspaper, go visit the area and speak to existing residents to get a sense of the community and character of the area to decide whether or not this is somewhere you can imagine living.
While this may be a vital consideration for investors, it’s also something that you should consider as an owner-occupier. If you purchase a home in an area that is heavily reliant on one industry, you need to think about how a downturn in the industry could affect the value of your asset.
For instance, if you purchase a property next to a mining town you need to realise that this could be risky due to the vulnerability of employment and growth drivers on that one industry. Similarly, if you live in an area that is dominated by tourism, would a downturn in the industry harm the value of your asset?Back to top
Once you’ve reviewed the broad considerations for your property suburb, you need to establish a property location checklist to identify (and separate) the essential and non-essential features of the potential property location.
Amanda and Reece
After reviewing their lifestyle and personal needs, Amanda and Reece have decided that they’d like to settle down and purchase a property in Melbourne, Victoria (VIC).
After conducting some in-depth research about different property markets and the key factors to consider, Amanda and Reece are still unsure about how to choose the right suburb for them. They feel overwhelmed by the amount of information they need to digest.
Their mortgage broker advises them to reflect on their lifestyle and to create a list of the must-have and nice-to-have features for their property location.
With a 2-year-old child, it is important to Amanda and Reece that they live within a family-friendly suburb that is close to a childcare centre and has a low crime level. They also want an area that has little noise pollution. Understanding that planned infrastructure projects can push up property prices and improve your quality of living, they want to live in a suburb where there are several infrastructure projects in the pipeline.
While not crucial, they would like to live near public amenities and services such as libraries and shopping centres. It would also be a bonus if the area was undergoing gentrification (e.g. urban renewal which involves residential property being renovated in “run down” suburbs).
Below is an example of what Amanda and Reece could include for their property location checklist.
They must live in an area that has:
- Median property values of $550,000 - $750,000
- A child care centre within a 5km radius
- A public school catchment area within a 10km radius
- Low traffic and area noise
- Restaurants and cafe’s
- Low crime levels
- Planned infrastructure developments
It would be ideal to live in an area that has:
- Public amenities such as libraries and shopping centres
- A medical centre within 15km radius
- Recreation facilities including parks and gyms
- A community centre
- Kerb appeal
- Undergone (or is undergoing) gentrification
Now that you’ve grasped the key considerations for different suburbs and identified your desired characteristics of the suburb, you can begin researching different markets.
As part of the research process, understanding the factors that influence property markets and knowing how to interpret this information is essential.
When you start researching different suburbs, you may feel overwhelmed by the sheer amount of information that you need to digest when trying to decide whether or not a particular location will be right for you. From planned infrastructure developments to the socio-economic status of an area to the number of public amenities nearby, researching (and comparing) different property markets can be challenging.
However, some research and due diligence can go a long way in helping you make a location savvy choice.
Here is some advice about how you can research different property locations.
The first step is to get your hands on some property market and sales data from reliable resources such as CoreLogic RP Data, Australian Property Monitors, the Australian Bureau of Statistics (ABS), SQM Research, Residex, and Onthehouse.com.au. You can access free suburb profile reports from Residex which provide insight into property price growth and median values, as well as the demographic profile of different suburbs.
Many mortgage brokers, such as Aussie, provide free suburb profile reports. Also, realestate.com.au and Domain offer suburb property reports where you can narrow your search down to the street as well as the property itself.
It’s worth looking at comparable sales, demand and supply indicators, median property values and demographics within the area.
Once you’ve compiled data on the suburb, you need to sit down and make sense of the numbers. Understanding the demographic profile of a community- the age, gender, disposable income- of residents can help you decide whether this is the right location for you.
Look into the population growth and employment statistics for each suburb as this can affect demand for property in an area which ultimately impacts property prices.
Consider whether residents have a high and increasing disposable income as this may attract growth and development to the area, such as new shops or other desirable facilities which are likely to improve property values over time. The disposable income is an important factor because when it eventually comes time to sell the house, as you want to know that you can attract high quality tenants that will be willing to pay a premium.
Capital growth and market cycle
You should aim to buy a property that is likely to outperform the average (and comparable) properties in the area. This is why looking at reports from Residex and CoreLogic will give you historical capital growth information. You also want to buy in a location that has long-term capital growth potential.
Check out the growth trends of the area over the past few years and observe whether there has been an upward, stable or downward trend. While you shouldn’t try to time the market, you should be cautious about buying near the peak of a growth cycle where there will be a stagnant period before growth continues. Generally, you try to buy at the early stage of an upturn.
If you’re concerned that an area is nearing the end of it’s growth cycle, check out nearby or neighbouring areas in which the growth may have a ripple-on effect. If in doubt, consult a local broker to provide you with insight into the growth trends and capital growth potential of the market.
It’s worth noting that gentrification can help boost property prices over the long term so try to look for an area that is undergoing gentrification as this can drive capital growth.
- Days on market (DOM). A low DOM% indicates that properties are listed on the market for a relatively short period of time compared to other markets which suggests that properties are being snapped up quickly.
- Low vacancy rate. A low vacancy rate suggests that there is sufficient demand for property within the suburb which is ideal if you decided to sell the property in future.
- Demand to supply ratio (DSR). Ideally, you want to purchase property in an area where demand exceeds supply. A high DSR indicates that demand outweighs supply for property within an area which could be a sign that the suburb has capital growth potential.
Make sure you combine both short-term and long-term statistics to get an integrated and triangulated view of a suburb.
Once you have a general understanding of the historic and future characteristics of a suburb, you should consult local professionals in each area to further enrich your research.
After interpreting the data for each suburb, you should visit the location and get in touch with local authorities. Remember that the way that a suburb presents on paper can be different in reality which is why it’s important that you visit the area yourself and speak to local experts.
Speak with local real estate agents, mortgage brokers and buyer’s agents to get a holistic view of the suburb. Enquire about the performance of the property market over time, the safety of the area and the convenience of transport and other public amenities that will be useful (as well as anything which is important to your home ownership goals).
Here are some questions you should pose to your mortgage broker or buyer’s agent regarding their knowledge of the suburb:
- What knowledge do you have of this area?
- What is the median property price for this area?
- What is my borrowing capacity?
- Can I afford to buy in this area?
- Is there capital growth potential for this area?
- Why do you think this area would suit my lifestyle and financial needs?
- What amenities and services are offered in this area?
- Has this area undergone gentrification?
- What are the price growth trends for this area?
- What are the demographics for this area?
- Is there demand for property within this suburb?
- What is the most popular sale method in this area?
- Is this a buyer’s or seller’s market?
- Is this suburb safe?
Bear in mind that there is some information which is not easily available online. This is why it’s crucial that you go to open inspections in the area, you see what the results of sales are, and consider using a buyer’s agent to represent you.
The final stage of your postcode research is to get in touch with the governing council of the area. Ideally, you want to buy property in an area with a proactive council that will be open to approving infrastructure developments and other community projects, as these can drive up property prices and boost the quality of living within the area.
It’s also important to see if there are any zoning or building regulations that may restrict you from renovating or upgrading the property as this may interfere with any future construction plans that you may have.
The right amount of planned infrastructure projects can support employment and capital growth. Consider projects that also boost employment such as the expansion of freeways, the construction of hospitals, new train or bus services or easy access to shopping facilities.
Go on the local council website or the National Infrastructure Construction Schedule (NICS) to see what planned infrastructure developments have been approved in your state or suburb. You’ll be able to view the project timeline, budget, project stages, as well as the expected end date. This can help protect you from investing in a suburb where planned infrastructure projects don’t go ahead.
If a suburb seems a little dismal now, don’t be uninspired. Many suburbs are in the process of development and the location could be drastically different in 5 or 10 years time.
Many government websites offer community profiles that provide information about council plans and development projects which can help you understand the supply and demand of the area which can help you refine your property location search. If there are projects for new businesses such as supermarkets or restaurants, you may be onto a gem.
On the other hand, it’s important to realise that there are also some infrastructure projects that may inhibit your standard of living as a resident. For example, if an airport was constructed near your home, the level of noise pollution would be significantly worse.Back to top
Now that you’ve analysed the characteristics of your ideal suburb, stay tuned until we release Section Three of the Home Buying Guide: Property Search.