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When we look into the past three decades, Sydney's residential property market has been very kind to investors as well as owner-occupiers.
30 years ago, people didn't have to worry about doing much research when they wanted to purchase a property because the return on investment was always quite lucrative.
But as you can see in Sydney, investors who chose to purchase a house close to Sydney CBD or with ocean views 20 years ago are three times better off today.
This is why it’s crucial to understand lifestyle drivers and the psychology of what Sydney property buyers and owners want.
What determines property value?
Owing a house is a basic need and most people dream about a home, they could spend the rest of their lives in. That's why residential properties have such a strong sentimental value.
Market demand and therefore house prices are driven by three main factors in Sydney.
1. Economy: People move to cities where they can access job opportunities and earn good money.
2. Culture: What can I do in this suburb in my spare time?
3. Social Behaviour: What will people think of me, if I live here?
People who are planning to live in the property will pay a quite high price (if they can afford to), to get their dream home. The views, distance to work, minimalistic or industrial interiors, the status of the suburb, lifestyle drivers – restaurants, schools, cafes, dog parks - it all matters.
The lifestyle conveniences mentioned above, are the direct cause of some locations outperforming others.
As a result, market growth has become more diverse, in that, some suburbs perform well and others stay at the same level or decline.
Our job as property valuers in Sydney is to become a part of this evolutions and study the human psychology of preference.
No longer can you simply purchase any property and wait for time to do its work. Nowadays, you have to be proactive and mindful to make better choices.
Location, location, location!
The only thing you can’t change about a property is its location.
When it comes to the value of the house, the location takes around 80% of its total value, while the property itself is worth approximately 20%.
Of course, we all aim to get both the location and the property type.
However, in the majority of cases, an ‘average’ property in a great location much preferable than a fantastic property in an average suburb.
But a word of caution here – if you decide to purchase the wrong property, you may undo all the great work you’ve done in choosing the right suburb.
Many property investors in Australia get this wrong and focus on the property instead of its location.
Take a look at the order features and characteristics you should consider when thinking about buying or investing in the property market.
2. Suburb (ideally within 10-12km from CBD)
3. Property (detailed analysis)
4. Due Diligence (building inspection, title type)
Houses, units or apartments?
Once you have determined the right location, you can start thinking about the property itself.
While houses, townhouses and units can all make good investments, it’s important you know which property type is right for the people living in that particular area.
Run a local demographics research – age, incomes, professions, family sizes etc. If it is majorly a family area, people will be more interested in houses rather than units or apartments. On the other hand, if it’s a fashionable area full of young professionals and uni students, a 70s style low-density loft is likely to do very well.
With the right research and team of professionals from IP Valuations behind you, a lot of the guesswork and risk of investing can be eliminated and result in an excellent investment that outperforms the market.
If you are considering buying a residential property in Sydney, make sure you know its current market value. IP Valuations is here to help with its independent and professional team of valuers.
Feel free to call us on (02) 9659 5446 or fill in our enquiry form.