The NEW real estate trends that will drive price growth – Alex Brooks

The more things change, the more they stay the same.

Take my children’s passion for junk food as an example. New types of bad food constantly tempt those kids – sour lollies that make your eyes water, trans-fat laden donuts that make Homer Simpson look slim or diabetes-inducing soft drinks that make Coke look healthy are all new foods they want to gobble down.

But even as the menu items change, things stay the same – all these foods are bad for them, and the more appalling those foods are for a growing body, the more they want them.

It’s similar for residential property. The market is certainly proving to be resilient but things are changing. Those same trends that drove price growth in the boom period might not be the same trends that drive price growth in the future.

And here’s my take on what we might need to be looking for when it comes to property that is as bulletproof and resilient as it has been in the past.

Most economists admit Australian housing is entering a new cycle, one which will be driven by high population growth and changing demographics of ageing baby boomers, more babies being born and higher immigration (especially from Asian countries).

#1: The Walkabout Factor
Property within walking distance of amenities such as schools, parks and shopping aren’t only more convenient but can be worth more money than homes in neighborhoods where driving is the rule.
An American study has found that in 13 out of 15 real estate markets, homes within an easy walk of facilities have higher values than those reliant on cars – and Australian real estate agents agree it’s likely to be the same here.
As big cities like Brisbane and Sydney become more choked with traffic, the ability to leave a car parked at home and use our own legs to get places becomes more sought after and desirable.
There are environmental and health benefits from living in a place where the car can stay parked, with lower levels of obesity and higher levels of “social capital” in places where the locals walk to streets and connect with each other.

#2: The Work Factor
With petrol prices as up and down as Paris Hilton’s skirt, commuting to work guzzles a greater share of take-home pay.That’s why homes located close to growing new work nodes – which are no longer in the central business districts of large cities – will become more valuable. BIS Shrapnel have discovered that suburbs where middle managers in businesses in outerlying commercial areas are growing in value as more professionals stay away from long commuting times and value time with their family.
Economist Jason Anderson says Sydney suburbs like Marsden Park grew strongly in value while other nearby suburbs languished in price, thanks to managers choosing to buy affordable family homes within an easy commute of new work districts in the north-west.
Studies show that households located in areas far away from work nodes will spend more of their income on petrol and cars than those who live in well-located positions close to employment.
Americans can spend up to 25% of a household’s income if they live in car-dependent suburbs while Europeans spend 9% because they tend to live in properties with easy access to rail and subways.
Study up on your city’s new and emerging commercial districts to see if you can find affordable, well-located family suburbs that could grow on the back of this trend.

#3: The School Factor
With the highest birth rate since 1971, Australia is having a mini baby boom which will see more families flee the inner city to be close to good schools and facilities for their children.
Schools have always been a strong driver of property values, but with more children being born there will be more of a scramble to live close to quality private and public schools – especially those on train lines or with good public transport access. Expect houses that cater for families and located close to parks, hospitals and other amenities besides schools to grow in value.
With the federal government introducing new school reporting systems from next year so parents can compare schools, it will be interesting to keep an eye on the schools that perform well and watch what property in the catchment areas do.

#4: The Green Factor
With energy bills skyrocketing across Australia, buyers will be more conservative about purchasing homes with obsolete energy-guzzling fixtures like electric hot water systems or old air-conditioning systems. Every state in Australia has committed to implementing a star-rating system for homes, so that by 2011 every residential property that is sold will be rated up to six stars for energy consumption.
Climate change, the emissions trading scheme and aging energy infrastructure means industry experts estimate electricity prices to rise by more than 30 per cent in the next three years – possibly even higher after that. Homes that are insulated, small, have energy-efficient appliances and good orientation will be chosen over older homes that require more electricity to remain comfortable.

#5: Bring on the ethnic architecture
Demographer and KPMG partner Bernard Salt believes high levels of Chinese and Indian immigration into Australia will begin to alter the architectural styles of Australian homes.
He says we will see more Asian influences in our homes, such as tiled floors and perhaps multi-family dwellings as Australia’s immigrants build their wealth through property.
Salt says immigrants tend to work hard to accumulate property and after 10 or 20 years will show it off with home improvements and renovations that reflect their cultural diversity.
“We’ll definitely see more mini Taj Mahals around the suburbs,” he says.

What’s your view? Is this all bunkum or will these ideas play a part in shaping the next property boom?