What drives investment property demand?
When assessing property for potential investment, it is essential to pay attention to demographic and social changes that influence where people want to live and what kind of property they want to live in. An example of social change is the lifestyle preferences of today’s Australians. Collectively we tend to view ourselves as more sophisticated than we did a couple of decades ago. The “I culture” is proving to be popular, as is the attraction to reside in locations near water. Investors would benefit from capitalising on these preferences by investing in property near “I” strips, close to rivers, beaches or harbours, and in inner city locations rather than rural locations.
Another factor which is responsible for driving demand is demographic trends. Many baby boomers have the view that the prosperity they have worked hard to create is for spending on lifestyle. As a result, many are trading their large suburban homes for smaller lifestyle-oriented properties located close to the ocean or near café strips. Many “generation X-ers” are also motivated by lifestyle – generally they are delaying marriage and family to allow themselves to achieve their goals. Single person households are also on the rise. These demographic phenomena point to smaller, lifestyle-oriented dwellings being in high demand over the coming years.
A rise in professional, dual income households with no children or fewer children later in life heralds an emerging group with money to spend on ensuring that they live close to good amenities, including transport, schools and the workplace. However, close proximity to transport and the workplace will become less important as the trend to work from home and spend less time at the office continues to grow.
When considering factors which drive demand, investors should ideally look for properties that appeal to both owner-occupiers and tenants. Bear in mind that these days, many of the features of a property that are valued by owner-occupiers are also sought by tenants. Bedroom size, a usable kitchen, storage, car parking, and other such features are just as highly valued by today’s tenants who will pay good rents for these features.