What makes a good investment property?

Suburbs with a good café or retail strip can be in higher demand as people typically want to live close to precincts where they can meet family and friends to shop, eat and socialise. This can also be the case for suburbs with, or nearby, large shopping centres that offer dining options, cinemas, supermarkets and retail outlets.

As the populations of our capital cities increase over time, so too does congestion. This can lead to more people wanting to live in suburbs with good transport links like train stations, bus exchanges and well-connected roads so they can commute more efficiently.

Compared to a generation ago, land sizes for metropolitan properties are shrinking, leading to smaller backyards. Being close to public open-spaces like parks, beaches and rivers can be highly desirable, as they give locals a place to meet others, exercise and walk their pets.

Families need to live in certain catchment zones to be eligible to send their children to specific public schools, so demand can be higher for properties that fall within the areas of the higher-ranked public schools. Demand can also be higher for suburbs near good private schools, as some families want to live closer to their children’s place of education.

Given that many people have to commute to their place of work on a regular basis, suburbs closer to major employment hubs can be in higher demand. This can include areas nearby capital city CBDs, as well as second-tier employment hubs in metropolitan areas.

Residential properties will typically be classified within a particular zone that dictates the number and type of dwellings that can be built on that piece of land, as well as the density.

The zoning is determined by government, typically local councils. When properties are rezoned for higher density, it can increase their value as they have more development potential - for example, if a property’s zoning is changed from a single dwelling to a duplex or triplex. Buying a property before it’s rezoned can be risky as there‘s no certainty that the zoning will change.

While these lifestyle offerings can help drive buyer and renter demand higher, these are just some of the features that help make a good investment suburb.

It’s also important to consider the supply-side drivers of the property market, as this will also influence how well properties perform in one suburb compared to another – understand more about supply, demand and other basics of property investment.