When you look at the enviable levels of economic growth Sydney has enjoyed in recent times, with Melbourne hot on its heels, it’s hardly surprising to see a distinct widening of the great urban divide in our country of late.
Growing employment opportunities in and around our city centres naturally mean more people wanting (and needing) to conglomerate there.
And what with petrol being so ‘exy’, and road and public transport infrastructure requiring significant improvement to keep up with the demands of a growing population, more young Aussies are seeking to live within a close and convenient commute to work.
What’s more, as our resource reliant economy starts to run increasingly short on resources; travel will become a luxury many can ill afford. At which point, we’ll likely see a more distinct social divide between outer suburbanites and inner city dwellers.
But that’s another article for another time. As is the one about…where do all the mining sector workers go when mining is no longer as relevant to our economy?
For now, the idea is to consider the fundamentals on which location assessment for a successful property investment is based.
If the current resource sector slowdown has reminded us of anything, it’s that ‘flash in the pan’, speculative locations, solely reliant on the bounty of one industry to sustain them, will eventually crumble under the weight of an obviously unsustainable economic and employment boom.
These are the lessons we need to learn from market history, as serious property investors. Moreover, we all need to remember certain key considerations when identifying prime investment locations.
Go where the people are
According to a book released in early 2015 by the Grattan Institute, close to 60 per cent of all national jobs growth occurred less than 10 kilometres from city centres between 2006 and 2011; at a time when the resource industry was still going fairly strong mind you.
Of course we’ve seen the flow on effect of increased demand on housing due to this employment saturation in our major city centres, with greater numbers of high-density developments and let’s not forget…booming property values in sought after urban neighbourhoods.
The book, entitled ‘City Limits: Why Australia’s Cities Are Broken And How We Can Fix Them’, also reveals that those who work within 10 kilometres of our five major cities were $20,000 a year better off than their counterparts, employed 20 kilometres or further from the CBD.
There are also better prospects of finding work for city residents, with nine jobs for every 10 locals, compared to just three employment opportunities close to home for every ten suburban dwellers.
And where they’ll be ten years from now…
As Australia becomes increasingly reliant on professional service sectors and housing to prop up our economy, more University graduates and would-be workers will be forced to consider inner city employment as the only viable option.
It might seem the likely effect of this will be more commuters living in outer postcodes and causing even more congestion on already fully clogged freeways.
But with our major cities fast becoming the powerhouse centres of Australia’s economic prosperity, demand in these regions will continue to climb, even as the finite land supply stalls rapidly.
This symbiotic supply and demand relationship, which drives property markets, will consistently remain a fundamental influence over housing values.
People will always want to live close to work, and commerce will continue to operate in centres that have the necessary infrastructure and amenity to support it.
The same cannot be said for suburbs where employment and economic conditions are not quite so buoyant and fail to offer the same level of long-term viability, as is the case with many remote areas and outer urban precincts.
Hence over the long term, it’s those suburbs reasonably close to the CBD, where most people will want to live to be close to employment opportunities, which will increase in value faster due to ongoing land constraints.