October 04, 2021

#121: How supply and demand dictate market movements - Part #3 Locational drivers - Superstar cities, population paradox, NIMBYism, zoning,

55 minutes

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode, Dave, Cate and Pete take you through: 1. Heritage listing and heritage overlay The trio discuss the impact of heritage listings, which protect a particular property. Although the supply of heritage property is relatively limited, so is the demand, due to the restrictions in being able to renovate and update the look of the property. Heritage overlay on the other hand protects the consistency of the properties on a street, normally to preserve the charm and architectural appeal of a property in a place of historical significance. Heritage overlays are varied and the types of heritage overlays range from façade appearance to paint colours to specific attributes of heritage significance, such as chimneys and windows. Many heritage overlays are specific to particular streets and precincts too. 2. Council zoning and regulations If you're purchasing in a developer friendly zone and the houses in the street are 40 years old or more, then you need to consider the future impact this will have on the street scape. Council regulations can limit the amount of property that can be built on a block of land by setting a minimum site area. If the minimum site area is quite large, it will be very difficult to subdivide the land and there is little chance of developments in this area. 3. NIMBY suburbs - not in my backyard! The state government will give local governments targets on increasing population density. The approach taken by NIMBY suburbs will be to allow for high density dwellings on main roads and near transport hubs, rather than medium density in the streets. The drawcard of these suburbs is not to live in an apartment on the main road, but in a beautiful character home in the side streets. As character or period homes are no longer being built, they are in limited supply and, conversely high demand. OECD data has shown that Australian house values have experienced the fourth highest house price growth over the last 20 years because of development laws. 4. Purchasing a block with subdivision capability If you are not set on doing a subdivision, but would like the option to do it at some undefined time down the track, question whether this is the right strategy for you. If your block has the ability to subdivide, then the chances are that the rest of the houses on the street also do. This means that your street can turn into a medium density hot spot of renters and first time buyers, with lots of cars in the street and cheap built decaying units. If you are thinking of subdividing, then it's better to be the first on the street and not the 20th! And in a gentrifying area, a capital growth, buy and hold strategy can be optimized if you can pick the A grade street and watch it beautify over the years. 5. The population paradox On the macro or city level, you want to look at purchasing in a city that is attracting more people and experiencing population growth. On the suburb level, look for a stable population, because that implies that there isn't a high supply of new property. In NIMBY suburbs, there is a high level of demand, but supply remains the same. This is in contrast with new Greenfield estates, where the supply is great, and demand raises to meet the supply before more are built. This is also a skewed sector of the market, where demand could be artificially created by governemnt incentives and grants to purchase new property. And don't forget to consider the land to asset ratio! 6. Rural towns and infrastructure When comparing country towns, mains...

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