Which is more important – location or property type?

Wednesday, 8th Jun 2016

property searchIt’s a common question among many investors – what’s the more important decision, choosing the location or the type of property when buying my next investment?

With literally hundreds of suburbs in each of Australia’s major capital cities, property investors have a huge range of choice when it comes to picking the location for their next acquisition.

Similarly, there is a large variety of property types to choose from, whether it be stand-alone dwellings, villas, townhouses, development sites or apartments, and then do you choose newly built or established?

So what’s more important, the location or the type of property?

The answer will largely be dependent upon your property investment goals, which, for most people, is to generate capital growth and a solid rental income.

For capital growth and strong rental demand, the location of the property is typically the most important aspect.

However, the location will generally have to work hand-in-hand with the property type.

A location may only make a good/bad investment if you hold the right/wrong property type.

For example, take:

  • a stand-alone dwelling
  • on a large lot
  • in a suburb where land is scarce
  • but apartments are rife

Provided the macro and micro-economic factors stack up, this stand-alone dwelling would generally make a good investment because of its large land component. On the other hand, an apartment in the same area would likely underperform because there is so much similar stock in the area.

It’s also important to consider your unique circumstances, such as financial capacity, risk tolerance and life circumstances.

If an investor is financially constrained and has a low tolerance to risk, a development site may not be the best option.

Want to find the best investment property that will suit you? Contact us today for a no-obligation meeting with one of our consultants.