Where to build in the future

• The factors behind successful suburbs are changing
• Beach, river, city, activity centres and good schools are traditional reasons
• New factors include upgraded shopping centres, cosmo life, parks and transport nodes

I recently wrote about the perils of building in the wrong areas, in spite of the considered opinion towards more urban infill.

Remember, Price Growth = Demand Growth / Supply Growth.

So where there is a suburb with a never-ending level of supply, you are already fighting a losing battle if you want your new build to be worth more when it is finished than it cost.

Why?

Because even if there are good factors such as proximity to the beach or a good school, there will be a continual level of supply increases for a long time to come as developers roll out new estate after new estate. The economics are against you.

Making the right decision

The first question to ask is ‘what do people value most about living in <your city or town>?’

If we can answer this, then we can identify suburbs that are either currently undervalued or will be undervalued in the future.

Historically, in Perth where I live, people have purchased property with considerations in the following order:

1. The beach or river – the most expensive land in Perth is located in a position closest to the river AND the beach (Mosman Park, Cottesloe, Peppermint Grove, Fremantle).
2. The city – these suburbs are the next most expensive (Nedlands, Applecross, South Perth) and those between the city and ocean are also of higher value (western suburbs).
3. Activity centres – land next to these are in the next category (Leederville, Mt Lawley, Victoria Park, Claremont)
4. Good state schools – with little influence from the above factors the next most expensive are in the catchment zones of a top state school (Willetton, Riverton, Bateman, Churchlands)

These are the factors that have been the foundation for prosperity for those people smart or lucky enough to have invested in property in these suburbs in the past.

However, it wasn’t always thus.

Ask anyone in Mosman Park who invested in the 60s or 70s and they’ll tell you that the suburb was considered a workmanlike area, was populated with factories and car yards. It was simply the land they could afford at the time.

The beach wasn’t always such an important factor for people, as it wasn’t so easy to get there as now.

In those days, there were other lifestyles people valued more, such as swimming in the river, having a big backyard, going to drive-in movies, and having picnics in suburban parks.

What will future residents value?

Looking forward half a century, there are factors we can identify.

1. Local parks
   People have started to value the size of their backyard less over the last 15 years. The median land size for new blocks has dropped from 600 square metres to somewhere in the 300’s. This means that people aren’t as bothered about maintaining a yard, but children still need somewhere to play.
2. Cosmopolitan life
   Young people today clearly value different things to their parents. Proximity to activities centres, café strips and bus routes is valued so much more now than land size. Our need to be entertained outside in the yard has changed due to the advent of indoor technology.
3. Shopping centres
   These days, most of Perth’s major shopping centres are in the middle of an arms race to upgrade themselves from retail hubs to lifestyle destinations. We’ve seen this in Claremont, and it will happen in Karrinyup, Innaloo, Carousel and Garden City too. Instead of travelling to the city or Fremantle, people are flocking to Whitfords Shopping Centre on a Friday night for pubs, movies and a meal.
4. Public transport nodes
   In nearly every other global city, property is 20% higher in value when it is within walking distance from a train or bus station. At two million residents, Perth is hitting a critical mass where the government is able to justify the spend of something like MetroNet. Studying the broader MetroNet plans and maps should hold you in good stead. Ask yourself, how far would I want to walk to a bus or train that actually got me to work or my friend’s house in a reasonable time?

Keep it practical. Build there.

Better than average performing suburbs

The four factors of water, city, fun, and schools are still kings. Building in a suburb with these factors should always do well for you.

My picks:

1. Warwick – a solid family suburb with a high percentage of parkland, its own shopping centre, and its own train station. Recent zoning changing is providing new dwelling products to the market that are being snapped up at a premium.
2. Morley – Great shopping centre, upgraded Bayswater train station and brand new Morley train station. Affordable price point.
3. High Wycombe – a forgotten suburb with solid 1980s double-brick homes and recent rezoning, will soon have its own train station one stop away from the airport. Don’t be fooled, the Forrestfield train station is actually in High Wycombe.
4. Mt Pleasant – most expensive on the list. Big changes with rezoning and eventual Garden City upgrade. Applecross Senior High School zone. River, City, Shops, School.
5. Rivervale – way undervalued for its proximity to the city. Is sitting in neutral waiting for the effects of the upgraded Great Eastern Highway, Belmont Forum, Optus Stadium, and strong zoning to push it into Victoria Park territory.
6. Doubleview – will benefit from the upgraded Scarborough Beach Development and Innaloo & Karrinyup upgrades. In Churchlands Senior High School zone.
7. Willagee – way under-valued compared to the price of surrounding suburbs such as Melville & Winthrop. Gentrifying suburb with rezoning to allow for newer housing options.

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