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Reproduced with permission.
In this series of articles, I am outlining my “Golden Rules for House Hunting”. So far, we have looked at Rules 1 to 5:
1. Buy the worst house in the best street.
2. Look for streets with redeeming features.
3. Look for improving areas with easy access to the city/beach/facilities.
4. Capital growth is dependent on Location, Land and Looks.
5. Avoid buying near adverse locations.
This week we look at my sixth rule:
Golden Rule #6 – Consider if you could resell the property in the ‘bad’ times.
“What are the ‘bad’ times?” I hear you ask. These are periods in the economic and/or property cycle where demand is very soft and it is a buyers’ market. This most recent period has been the last 2 to 3 years, which has been as a result of the Global Financial Crisis (GFC).
First and foremost is location. I have mentioned this factor many times in previous articles but the reason I do so is because LOCATION IS THE MOST IMPORTANT FACTOR to consider when purchasing property. Location is something that will never change and is one of the main reasons that real property is such a uniquely traded commodity. Living in a desirable location such as near the city, beach or in an area well serviced by public transport are features people will desire regardless of the state of the market. The CBD is where a lot of people work and is particularly popular with those that work (or study) in the CBD. Public transport is also important, especially proximity to train stations.
Secondly, consider the property itself. A property that is popular no matter what stage of the property cycle we’re in is one that appeals to most buyers. For example, a 3 bedroom house is more popular than a 2 bedroom house as there are more people wanting to live in a house with 3 bedrooms compared to 2 bedrooms. A 2 bedroom unit is more popular than a 1 bedroom unit as there are more buyers and renters looking to live in 2 bedroom units than 1 bedroom units. Huge McMansion type homes or small studio apartments can be very difficult to sell in a tough market.
Also consider if you’re property is ‘unique’ in its design and/or lay out. Whilst a certain home design may have worked for you and your family, it may not for others. An unconventional home design may not be functional or practical for your potential buyers and it may prove to be a turn off. This is not as significant as the initial two points but it still needs to be considered.
Happy House Hunting!
Written by Peter Koulizos, university lecturer, author and buyers advocate.