Location is important to consider whether you are buying or building a home. Supply and demand are two crucial market variables that will always play a part in determining the value of most anything, including real estate. Housing supply in attractive areas is constrained by the number of dwellings available in that area.
As a result, the location promotes desirability, which then drives demand, which, in turn, leads to higher real-estate prices. The optimal location for your new home could be determined by the type of property you’re seeking.
So what makes for a “good” location and what factors should you consider while deciding where to buy your home?
FIVE FACTORS
The Lot Itself
Your house depreciates over time. On the other hand, the lot will likely retain (or perhaps increase) its value in relation to the house. If you have the option, go for a larger, better-shaped, or better-located property over a pricier one. You cannot change the location, but you can always update, expand or completely renovate a less appealing house. A house with a beautiful view or near a body of water is likely to have more valuable.
Neighbourhood
For you and your family, a new home should provide the highest level of safety and comfort. It would be best if you chose a safe place with a low crime rate and a healthy, clean, and well-maintained environment. The area may also determine the size of the lot on which your house is built. It’ll primarily be a matter of personal preference as to which neighbourhoods appeal to you. On the other hand, all truly great neighbourhoods will have a few crucial characteristics.
The neighbourhood’s look is essential. Large trees, well-kept landscaping, and proximity to parks or communal spaces are all desired features. The level of access is also important to consider. One clue to a neighbourhood’s popularity is how long properties in that area stay on the market.
You can’t change your neighbours, for better or worse (unless they decide to leave). So, before you become too invested in the home-buying process, take a walk around the neighbourhood. Take a walk down the street and try to meet some of the locals. Spending time in the area should give you a fair idea of who lives there. Do you prefer to live in a neighbourhood where there are a lot of young families or retirees? Are you seeking a close-knit community or a less neighbourly community? You don’t want to live with people who are bad influences or who are involved in unlawful activities, whether you are a family-oriented person or not. It’s crucial to look for a home with friendly neighbours and a pleasant residential atmosphere.
Don’t buy in a good or bad neighbourhood; instead, buy in one where you can see the future. When it comes to neighbourhoods, do your study, but keep in mind that the greatest ones will be more expensive investments. You want to invest in a neighbourhood on the edge of becoming the best.
Schools
Access to a good school is one of the factors that many homeowners consider while making their decision. There will always be buyer demand if there are high-performing schools in the region. If you have children or plan to have children, this should be a huge concern for you.
This makes schools a key component of your home’s location, especially when many Millennials want to start a family and live in a top school district. Even if a person does not have children, the quality of the educational system affects the value of their home. Buying in an area with an excellent school district is a good approach to investing in real estate.
Bonus Tip: Pick a location Millennials want
Millennials account for more than half of all house purchases, and this percentage is expected to rise. Therefore, older buyers and property investors should think about what draws Millennials to a specific place. Think about who would be interested in buying your property if you decided to sell. What qualities do Millennials search for in a location? Some of the sweet spots for Millennials include affordable housing, convenient commutes to work, cultural and artistic events, strong local amenities, and outstanding schools.
Amenities And Transportation
Buyers frequently desire and need convenient access to services and transport alternatives, which is one of the reasons location is so crucial in real estate. Ideally, restaurants, grocery stores, dry cleaners, shopping, and entertainment will all be within walking distance. The ability to walk to a yoga studio, gym, popular restaurants and retail districts can enhance the desirability of a location.
A residence close to major highways and public transport options – including bus stops, metro stations, and public bike-share stations – is also favourable.
When looking at a house, make sure to consider how accessible it is to these essential facilities. You have complete freedom to choose which neighbourhoods appeal to you. On the other hand, many others will be drawn to the neighbourhood’s accessibility.
Development
It is not just current amenities that are important, but also future ones as well. Plans for new schools, hospitals, transport, and other infrastructure might significantly boost the area’s property values. Commercial development can also increase the value of a home. When looking for a home, check to see whether any public, commercial, or residential developments are planned, and think about how these additions might alter the area’’ s desirability.
New construction is likely to pop up from time to time, and you’ll want to make sure you understand the neighbourhood’s and area’s long-term prospects.
What Else Affects Your Home’s Value?
Location is not the sole element in determining the valuation of your home. The national and local real estate markets will have an impact on the value of your house, particularly in areas that are severely hit during a recession. When the housing market is swamped with inventory, prices fall.
The state of the market might also affect how long it takes to sell your home. If you’re selling in a buyer’s market, your home may linger on the market for a lengthy time. If you’re selling in a seller’s market, on the other hand, your home is more likely to sell quickly. Even if your home is in great shape and in the right location, your local market and worldwide market have an impact on its worth.
Remember also that the house itself is also an essential part of your property’s value. A home in the best condition will fetch more money on the market than a home that needs much work in the same location. The house’s age is also a factor. Older homes, even when well-built and well-maintained, may be perceived as requiring more upkeep and maintenance.
Insurance considerations are another factor that consumers will consider when looking at your home. Some homes could be in high-risk flood zones. Therefore, homeowners should consider purchasing supplemental flood insurance. Similarly, the cost of insurance is affected by various factors, including the materials used to construct the property.
People usually are willing to pay more for properties when interest rates on borrowing are low. Short-term and long-term interest rates both have an impact on people’s capacity to purchase a home. People’s short-term debt could become more expensive if short-term interest rates rise. This means they may be unable to buy a property due to a lack of funds.
The size of your home will be another critical factor in determining its market worth. The price per square metre is frequently used to assess home values. The amount that buyers will pay per square metre, on the other hand, can vary greatly. The amount of usable area is also taken into account while calculating its worth. Unfinished basements, attics, and garages are often excluded. For both appraisers and purchasers, the most critical issue is livable space.
Property improvement plans can sometimes increase the value of your home. This is true in older homes with amenities that have become obsolete. Projects like adding a complete bathroom or remodelling the kitchen can occasionally increase the property value of less expensive homes. Updates such as installing wood floors or adding a pool may be a better investment for more expensive homes. Even applying a fresh coat of paint can help you sell your home faster and for a higher price.
Finally, what a home looks like when potential buyers see it makes a difference in what they’ll be willing to pay for it. Savvy real estate brokers make sure a house appears its best when it is viewed. So, while you conduct a home inspection, you must thoroughly inspect its maintenance, repairs, and improvements. Before you decide to buy a home, you must calculate and consider the overall cost of repairing cracks and renovating the house, significantly raising the buying price. The builder’s reputation, style of architecture, and quality of construction, among other factors, all have a role in determining the property’s value.
KEY TAKEAWAYS
- Location is by far the biggest factor when it comes to the value of the real estate.
- Consider a neighbourhood’s accessibility, aesthetics, and amenities, as well as future development plans.
- The proximity of the property to things like busy highways and community centres may make it less resaleable.
- Because land tends to appreciate in value, it generally takes precedence over the quality of a home when determining value
- A home in a poor location may be cheap to purchase now, but it will be more challenging to sell or rent out in the future.
- If you can’t go for a location you want, look at the next emerging suburb.
- These principles can be used anywhere, not only in the blue-chip inner-city suburbs.
Talk To An Expert!
Make sure you thoroughly research the neighbourhood before buying real estate. As you’ve learned, location is the most important factor! If you’re confused about the property location or home loan requirements, our home loan experts can guide you through.
Please fill in our free assessment form or contact us on 1300 889 743 to speak to a mortgage broker.