How Far Will You Have To Go? The Price of Proximity

Recently I had an exciting opportunity to sit down with acclaimed property investment coach Jane Slack-Smith. You may know Jane from the Your Property Success courses or her frequent media appearances. We got to talking about how Microburbs data can assist property investors, and she raised the very early step of finding areas that are in your target price range.

“It may seem fine to look at monthly reported information regarding median house prices in your local capital city”, said Jane, “but cities are made up of hundreds of suburbs. In some instances you may find that the older more established suburbs with bigger blocks have less properties and less residents compared to the many new development suburbs opening up on the outskirts of town. Just because the median for Brisbane seems cheap, does that mean you can get a blue chip property less than $600,000? The answer is no.” There is a ‘rule of thumb’ which can get you started, but it’s no substitute for hard data.

“Within 10km of the CBD I would add a margin of +20%, and within 20km, 10% of the median. This is because often by the sheer number of suburbs outside the 10km range compared to the number inside can greatly affect the median for those area. That is that there are many cheaper suburbs below the median in the outskirts that will bring the city median down, hence why I add that buffer. Being able to find out though what the real medians are within an area allows you to assess quickly if you can afford within 10km or even 20km of the CBD or if in fact you are looking at the outskirts.”

You can imagine how excited Jane was to learn that we can make that data available. Based on reported sales for 2016, we have profiled all of Australia’s state capitals to help you find an investment property that fits your budget.

First we’ll look at house prices for all state capitals, grouped by whether they are 0-10km from the centre of the city, 10km-20km and so on. For instance, we can see that if we had a $600,000 budget, we could look at central Perth or Adelaide, 10-20km from the centre of Brisbane or Canberra, 20-30km from the heart of Melbourne and more than 40km from the middle of Sydney.

If we look at units rather than houses, the prices are lower overall and the curves are more closely matched. It’s interesting to see that units in the centre of Melbourne have a lower average price in the 10-20km band. This may be because units a little further out are larger. To normalise for the fact that properties tend to be bigger as we get further from the city, we’ve also done a chart of square metre pricing by distance to the city centre. This is a measure more commonly used with commercial real estate, but is basically just the purchase price divided by the size of the floor space of the property to give a price per square metre. This shows us that properties in the centre of Sydney are actually much more expensive than anywhere else in the country, in terms of the space you get for your money. We also see that distance effects on property prices are fairly uniform elsewhere, once property size is accounted for.

Sydney

Sydney’s peak of $6000 per square metre for residential space within 10km of the city centre is off the charts by national standards. The popularity of downtown Sydney is not just about proximity, but also the harbour and there are plenty of harbour views and even ocean vistas to be had in the 10km inner circle. Sydney’s sprawl extends even beyond the 40 km line, with residential areas 55+km from the city centre.

Melbourne

Brisbane