You Need Land to Get Any Growth - Or Do You?

We hear this one every other day from enquirers who are tempted by the affordability of new apartments, yet are held back by what they’ve grown up hearing on the news and from their family and friends, that only properties with a high land component will see any capital growth.

Perhaps back before the late 1990’s that adage held sway, but with the Sydney population projected to hit 6 million by 2030, an increase of 1.3 million from today’s 4.7 million, up to half of Sydney’s population is forecast to be living in a strata titled apartment in a little over 15 year’s time. 

What this means is that people will need a home and because households sizes are also shrinking with baby boomers downsizing, young professional couples putting off having children until much later in life and then having fewer children, the quarter acre block in the suburbs is no longer what everyone aspires to. 

What today’s buyers want is convenience and proximity to their friends, favourite restaurants, shops, family and transport to and from their places of work. This makes the location of a property, rather than its ultimate land component the most valuable part of the equation, second only to the physical size of the property itself. 

For example, 1 Bedroom apartments in the Sydney CBD were around $450,000 in 2005. They are now over $600,000. Conversely, over the same time period, a 4 bedroom house in the North Western Hills District of Sydney stayed at around the $550,000 to $650,000 bracket. 

Land size isn’t what it used to be. It is the location of your property that happens to share a parcel of land that holds the most value.

Afterall, location, location, location, is an even older saying. And it hasn’t changed.

Published on 22nd of November 2018 by Michelle Leftwich
Michelle Leftwich
Michelle Leftwich

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