Cafes and supermarkets support house prices: Peter Chittenden

OK, so I understand that house and apartment prices in Sydney are expensive and likely to remain so.

While it depends on which research you read or believe Sydney generally ranks among the world’s top 10 most costly cities for residential real estate. Ranking alongside Monaco, Hong Kong, London, New York and Singapore.

Prices are influenced by many factors and it’s a lack of supply that is one big factor in Sydney like it is for Monaco, Hong Kong, Singapore and Geneva. These cities have one thing in common, they have very limited land and so little space to expand and Sydney has that problem as well but only to a degree.

Supply here is more to do with planning and the fact that Sydney is spreading over such vast distances and there is  a basket of other very important factors that drive demand and hence prices in particular areas. No matter if we’re talking about houses or apartments, both new and established, there’s a batch of ‘demand boosters’ that are having an ever-increasing impact on prices. From a marketing perspective, I am also sure that buyers are fully tuned-into these factors and are ever more savvy about what they look for when shopping around the market.

If we’re planning a marketing campaign for a new apartment project, for example, I think it’s no longer enough simply to tick the location box. As some sort of all-encompassing concept that’s not good enough, as markets change and mature we need to apply a much broader view of what drives a particular location, it’s a diverse and interesting mix.

Supermarkets & Train Stations

In any major city like Sydney, Melbourne or Brisbane the pressures of modern urban living are fairly obvious. How many times do you hear comments about racing to pick up the kids from school or not having time to get to the supermarket to fetch something for dinner, with these comments usually punctuated by ‘there’s never enough time’ in my day?’

It’s these everyday hurdles that if eliminated or made easier by where you live can really boost demand for a particular location and also act to underpin local prices, sometimes in a more significant way than we might be aware of.

Taking a closer look at some of these ‘demand boosters’ unlocks a list of features many buyers would both actively and instinctively look for.

Lets start with shopping, the spread of major supermarkets and the long hours they trade is clearly testament to how important having a good supermarket close by has become. Buyers would also I think be influenced by how easy it is to park, and they may even look for a particular type of supermarket and that could logically extend in some markets, like inner-city locations to emerging organic and gourmet brands.

In a similar vein of thinking markets and growers-markets, in particular, have become very popular and they could be a positive factor for some buyers.

Then we have access to schools and university, both have become key drivers of demand in some areas, it’s no accident that some of our most expensive suburbs are located near our best known private schools. And growth in apartments around major universities has been explosive for many years now making these areas popular with all sorts of buyers including investors.

Another booster comes in the slightly less physical guise of a suburb or street name and apartment brand, and for some buyers the street and apartment number are factors. In every city there are long-established areas and suburbs with instant appeal and allure, in Sydney, for example, the ‘Hills’ and ‘Northern Beaches’ have for pulling power as do historic suburbs like Paddington. The same also applies to new areas, and again with reference to Sydney examples of newish locations include The Ponds, Homebush (thanks to the Olympics) and Edmondson Park (thanks to the rail connections).

With apartment buildings, the pulling power of the brand is often underpinned by a combination of the developer’s reputation, the choice of architect and shrewd marketing.

Having access to good cafes and restaurant is another very obvious factor that will attract a buyer’s attention and act to boost local prices, a great coffee shop is a very real attraction and many inner city suburbs now have such establishments at their heart. Quality and innovative dining are real draw cards and even short-lived pop-up eateries can boost an areas appeal.

It’s also no accident that both Sydney’s Barrangaro and Melbourne’s Crown Casino have both employed international top-draw restaurants, in fact possibly the best in the world to boost their respective brand, and its worked big time. It’s clear that no matter if it’s high end or casual takeaway food a good operator in an area of neighbourhood is a very real positive that reflects in an area’s appeal and local real estate values.

The last two factors are easily the most sought after and these demand boosters revolve around views and access to public transport. Water views are easily the most prized, be the harbor or river views or as we see in Canberra, lake views, they all rank highly among buyers and big ticket homes with water views taker the prize, while developers will always do battle for sites with water views. Plus direct water access will motivate stronger buyer demand.

My last suggested booster is another obvious one and it’s access to public transport it’s a big factor in Sydney, as it is in other cities like London.

But it’s becoming complex, and buyers are today more sensitive to public transport congestion, just being near a rail or light rail station is a positive factor, however as various state governments put more housing on major rail links congestion is a real issue. News about the over crowding on trains soon spreads and buyers become sensitive and so look for options.

The spread of light rail in many areas is an obvious response and major transport infrastructure projects will continue to drive growth for some time, still we need to hark back to the fact that demand and hence price is driven by many diverse factors and each can help attract a premium if carefully marketed.

Peter Chittenden is managing director for residential of Colliers International. He can be contacted here.