Whether you are buying property to live in, or as an investment, those properties that have greater owner occupier appeal generally perform better over the longer term than other properties that may be considered investor type products.
But what does this mean?
And, how can we ensure that a property we are buying has good owner occupier appeal in the current Brisbane property market?
Whether you are buying your first home, upgrading to a family home, downsizing to a smaller home or purchasing an investment property for others to live in, it is a good idea to ensure that you are buying the type of property that ticks all of the boxes for how and where people want to live.
This may come as a surprise to some investors, who may consider buying with a calculator in an area that shows a good yield is the only way to go.
If your strategy is to build wealth through property, then understanding the key drivers of capital growth over the longer term is so important.
It is capital growth, not rental yield, that builds long term wealth in property.
The residential property market in Australia is dominated by owner occupiers. More than 65% of Australians live in a home that they own outright, or they live with a mortgage in their own home according to the most recent census data. Therefore owner occupiers represent the largest segment of the market. Investors make up the balance of residential property owners, being approximately 35%.
This means that properties with better Owner occupier appeal will be the properties that are most sought after by the largest segment of the market both now and into the future.
Even property experts such as John McGrath agree with this principal – even if you are buying an investment property and not a home. Targeting properties with a high level of owner occupier appeal makes sense.
Buying a property with owner occupier appeal usually involves analysing suburbs to determine the best streets, school catchment zones, proximity to local amenities etc. Properties with good street appeal, in quiet leafy neighbourhoods and with desirable layouts and floor plans will always appeal to the owner occupier and therefore attract premium prices.
Homes with owner occupier appeal are the types of properties that the majority of people want to buy when it comes time to re-selling, and the types of homes that people want to rent when you actually own that property as an investor.
Here are some key ingredients for a property with high owner occupier appeal:
- Street Presence – Consider what a property looks like from the street. The first impression should be a good one based on the way a property presents. Wide frontage, attractive gardens and a tidy neighbourhood are a good start. If you need ideas to improve the street presence, you can try Five ideas to give you home renovation street presence.
- Indoor/Outdoor flow – the layout of a property will determine how people live in the space. Properties with good owner occupier appeal, provide a floorplan that allows good integration between indoor and outdoor living.
- Storage – this is something often overlooked but a feature that is very important for maximum owner occupier appeal. We all want somewhere to store our stuff! Look out for storage solutions, renters also love this feature too.
- Demographics of the neighbourhood – You may be wondering why this has such an impact on Owner Occupier appeal? Well owners want to live in an area that is dominated by other owners, rather than renters. See a Tip in the Video below:
- Natural light and ventilation – We all love to let the sunshine in, so this is an important feature in a home where owner occupiers want to live. Turn off the lights during open homes to see what the level of natural light is in a room. The lighter and the brighter a property is, the higher the owner occupier appeal will be. If a property is dark and gloomy, it will not be as appealing.
- Peaceful location – Owner occupiers like a quiet and peaceful location, so in most cases main roads and busy transport corridors need to be avoided. Turn off soft music during an inspection to see what road or train noise is audible.
Investor grade properties may be those that are less desirable for the owner occupier.
They may be properties that have a small living area, close to industrial or commercial areas, located on busy roads or in areas where there is little or no street appeal.
Whilst you may generally find someone to rent these properties, when it comes time to re-sell the potential target market for these types of properties may not be as wide or as large due to the lack of owner occupier appeal. Doing some homework up front, before you buy, can make such a difference in the long term growth of an asset!
So when looking at buying property in Brisbane, or in any other area for that matter, consider the factors that impact on owner occupier appeal and ensure that you are factoring in as many of those things as possible in your property buying decision.