24 Apr 2 factors other than location that impact prices – Jodie Walker
We do know that what separates good property is location. Location, location, location. But according a new secret agent report, it has a lot more to do with two other factors. Jodie Walker from Secret Agent tells us what they are.
Kevin: Well we are certainly in an interesting time in terms of property in Australia, the market has changed a lot compared to what it was 18 months ago. Clearance rates have fallen, prices have stalled in some areas, and deteriorated rather rapidly in many parts of Melbourne. At the same time, we’re seeing urbanisation continue with more and more people wanting to live closer to the city and closer to all amenities. In addition to this, population growth is continuing to rise rapidly.
Kevin: We do know that what separates good property is what we’ve always called location. Location, location, location. Well according a new secret agent report it has a lot more to do with two other factors; walkability and greenery. Jodie Walker from Secret Agent, is with me, Jodie welcome to the show.
Jodie: Thanks Kevin.
Kevin: Yeah great report which we’ve now got on the website too. So go and have a look for that. Jodie, can I just ask you, for the report you allocated properties into three generic buckets. Tell me about that? What are they?
Jodie: Yeah so at the moment what we’re seeing, we like to allocate property into three buckets based on pretty much structure and location. So A grade is defined as having a really good structure in an amenity rich location, B grade kind of has one of those characteristics, and C grade doesn’t really meet the mark on either structure or location.
Kevin: Okay well they’re three very specific buckets. Can you broaden that out a little bit for me, if I could just ask you what makes a good location? What is it?
Jodie: Okay, so that can be, that’s a very complicated question obviously because it does depend on the person. But what we’re finding more so is that a good location is something allows the resident to walk to these lifestyle locations like cafes, restaurants, obviously being able to walk to public transport is important, and if possible like employment or study areas.
Kevin: We’ve had a general description in the past about a location and we’ve thought that it was important to be away from main roads but close to all facilities like shopping and school and so on. But walkability has become a lot more important. Do you think the general description, the expectation and importance of walkability has changed say in the last decade and if so how?
Jodie: I think so just because obviously the increase in our cities in particular, like the congestion, more people living in the populated areas. People are just over it, like spending half their day in a car, you know? So they want to be able to walk to work or walk to, wake up in the morning and walk downstairs and get a coffee. Saves time and it just saves that stress of being stuck in congestion.
Kevin: Yeah, of course there’s sacrifices you have to make when you do that and that could be, you know, maybe downsizing because to go into a built environment already which is where people want to live, you’ve got to recreate the living which means probably putting more houses into smaller space.
Jodie: Yeah, and you know at the end of the day we’re found as well, that people actually don’t seem to mind that. They want kind of more compact spaces because it’s easier to maintain and we’ve spoken about that before in terms of downsizing. So it kind of like links up nicely.
Kevin: With walkability being so important, how much have you been able to work does walkability impact on the price of a property?
Jodie: So when we did our study back in 2013, that was based on 2012 prices and obviously a different market to what it is now. You know, the market was growing strongly back then. The price premium back then we found was almost 300 dollars per square metre. Like for every five points over 60, in terms of walk score value. So more walkable property you can expect to achieve $300 per square metre more for every five point increase in walk score. That was obviously in a different market, so what we are interested in now is conducting a study like that in a few years time once this downturn is kind of over to see if walkability has the same premium.
Kevin: Well I imagine it would be a greater premium given the fact that we do know that volumes come down. In other words, you know, properties are now smaller therefore the per square metre rate is actually going to be larger purely because it has to because we’re in a smaller space. But it will be interesting to try and compare apples with apples, to try and get a comparison. Yep.
Jodie: Definitely, and we do feel like we have looked at studies overseas, in America, and they were mentioned in the report and walkability does seem to have a protective effect there. So we feel like it will be similar in the Australian market too.
Kevin: Well this report of course deals with walkability and greenery. Green space, it’s something that is really hard to make, especially in established areas which is really what we’re talking about here. So do you find that the developers are creating this and you know, they’re understanding the importance of developing green space in new developments?
Jodie: I do think they are starting to realise the importance of it and there is a lot of work in the urban planning sphere to kind of work out the best sacrifice between green space and more accommodation for growing population. So it’s a very hard like difficult thing to work out, but I think they are aware of it and they’re doing a better job of starting to appreciate the importance of it.
Kevin: Okay, just to close off, what was the final conclusion of your report?
Jodie: Okay, final conclusion is that basically it’s really hard to tell what makes a good location and how certain variables influence property value. But we do feel that walkability and greenery are going to continue to increase in importance and are going to be something that people desire long term.
Jodie: So if you have a property that is walkable or is in a green location it’s going to continue to do quite well regardless of the economic conditions.
Kevin: Thanks Jodie. Jodie Walker there from Secret Agent, and you can check that report out on our website as well. Thanks Jodie, talk to you again soon.
Jodie: Thanks Kevin, bye.