With property investment there are several factors that can come into play, but which will be most likely to influence the capital growth? Research has shown that up to 80% of the hard work will be done by the location and roughly 20% will come down to the type of property that you own.
Although property investors and homebuyers focus around features such as the area’s demographics, job availability, and property demand, there are other factors that they neglect to take into account. These include deciding factors such as available transport infrastructure and schools and universities.
Australian property investment experts have urged buyers to consider all factors prior to investing, as recent studies have shown that specific types of infrastructure can have a strong bearing of a property’s increase in value.
It’s easy to see why people may believe that being located close to freight infrastructure, for example, would decrease value, as loud trains aren’t an appealing feature. Being close to public transport, however, will inevitably increase a property’s growth.
Why you should buy near a train station
A report from two Sydney-based planning consultancy firms indicated that houses within a 800-1600m distance from a train station had an added value of 0.3%. Properties that are 400-800m away generated a boost of 1.3% to their land value. Properties based less than 400m from a station, however, secured a significant 4.5% boost.
Numbers like these demonstrate the power that public transport infrastructure holds over the property market. The greatest benefit is that you don’t even have to be right next to a train station. Many choose to buy up to 1600m away to distance themselves from the noise, whilst still enjoying the added capital gain.
Which infrastructure you should avoid
Although train stations boost growth, main roads demolish it. Despite any temptations, avoid buying a property that neighbours a main road, as the noise and speed is a real estate turn-off for many buyers, which reflects negatively on the capital growth.
Despite being cheaper, you should be looking to invest in great properties, not ones that are kind on the wallet. A similar study to the train station report indicates that having a property located within 100m of a main road can cause a capital gains loss of up to 7.6%. Properties situated between 100-200m, however, may only receive a 0.6% value reduction.
Data like this can be useful, but ultimately you should use it as a supplementary resource to support your own research. The property you decide on in the end should reflect the local demographic that you want to attract. Take this and the above factors into account and you’ll help yourself to make the right investment choice.
The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.