Australians are house proud. We aspire to live in the best homes we can afford and in the most sought-after locations. There was a time when citizens aimed to move closer to the city since it meant a shorter commute to work, leaving more leisure time for family and friends.
Properties in close proximity to the CBD are, however, significantly more expensive than those in the outer suburbs so an upgrade inevitably led to a larger home loan.
Covid-19 is changing that. Many people now work from home so the commute to work is no longer a consideration. Now people have started the move from inner city apartments to the suburbs on the outskirts of the city where they can afford a freestanding home.
This change in requirements has meant that many city dwellers can now upgrade their homes without increasing their mortgages. It has also meant that younger people can invest in bigger homes that will accommodate their growing families.
For people, who would once have upgraded in the inner city, an extra bedroom would have cost them anywhere from $100,000 to $200,000. Now that they are moving into cheaper suburbs, they can afford several extra rooms for the same price as their inner-city apartment.
Families can now have enough money to buy houses with big yards to accommodate the needs of the children. Just over a year ago such an upgrade would have been a pipedream since they needed proximity to the CBD.
While interest rates are low, demand for homes on the east coast has seen a significant increase in value, especially in the top 25% of homes in all four capital cities. Property prices as a whole have increased but the biggest increases have been in the highest price bracket.
To demonstrate – CoreLogic measures three brackets of home values. In Sydney over the three months ended in February, in the top 25% of homes by value, prices rose by 4.5%. By comparison the middle 50% grew by 3.1% and the bottom 25% increased by just 2.4%. The trend was exactly the same in Brisbane, Melbourne and Canberra.
If you’re moving to the outer suburbs it makes sense to buy near a transport hub or on a train line because even if you don’t commute, when you eventually sell you will get a better price if the new owners can get to work or school.
Whenever you buy a home you should consider its resale value. This is particularly true if you are buying a home that you intend to keep until retirement and use it to help fund your golden years. Follow the tips below to make the best capital gains on your property:
- Look for a property that is priced above the median price for the suburb. These are typically the nicer properties in the better locations so you can expect an above average growth in price.
- Look for features that surpass those of other homes in the area. This may be a bigger yard, a great view or a dream entertainment area
- Find a home that is within walking distance of shops, transport and schools
- If you’re upgrading from the city to the outer suburbs, you should have a comfortable budget to work with, so take you time and find the best house that meets your financial and lifestyle requirements.
It is true there are not a lot of properties on the market right now, but this will change over time. So be patient and keep looking.