Why Two Properties in the Same Suburb Can Perform Very Differently

Why Two Properties in the Same Suburb Can Perform Very Differently

When people talk about property investment, a lot of the conversation focuses on where to buy. Which state? Which city? Which suburb?

And while choosing the right market is important, it’s only part of the equation.

As a Central Coast buyers agent, we regularly see just how much difference there can be between two properties located in the same suburb — sometimes only a few streets apart.

Whether you’re buying an investment property on the Central Coast or interstate, choosing the right suburb is only the starting point. The individual property you buy matters.

The suburb is only the starting point

Investors can become fixated on finding the “best suburb” or the next property hotspot. But once we’ve identified a market and suburb that fits a client’s property investment strategy, our attention turns to the individual property.

We look at the suburb, the street, the position within that street, the land, the dwelling and ultimately who is likely to want to own that property in the future.

That last point is particularly important.

A property with broad owner-occupier appeal can create greater competition when it eventually comes time to sell. A property that appeals to a very limited pool of buyers may not have the same advantage.

Micro-location matters

You could have two almost identical homes in the same suburb, but one is positioned in a quiet residential street while the other backs onto a busy road. One might be within easy walking distance of schools, shops, parks, beaches or transport. The other could be in a less convenient pocket.

Bateau Bay on the Central Coast is a perfect example.

While two properties might share the same Bateau Bay postcode, their location within the suburb can have a significant impact on their value and buyer appeal.

There can be a considerable difference between property values on the eastern and western sides of Bateau Bay. Homes on the eastern side, particularly in sought-after pockets closer to the beach, generally attract a different level of buyer demand and pricing to properties further west.

That doesn’t automatically make one side a better investment than the other. The purchase price, land, individual property, rental return and client’s overall strategy still need to stack up.

But it highlights an important point: a suburb median can only tell you so much.

This is where having a buyers agent with genuine local knowledge can be valuable. Understanding which streets, pockets and even sides of a suburb are more sought after can be just as important as choosing the suburb itself.

And Bateau Bay isn’t unique. Across the Central Coast, there are suburbs where moving only a few streets can change the property’s outlook, walkability, accessibility, buyer demographic and ultimately what buyers are prepared to pay.

Land matters

We generally place significant importance on the underlying land when assessing an investment property. The size, shape, frontage, slope, zoning and usability of a block can all affect its appeal.

A well-positioned property on a usable parcel of land may also provide opportunities to renovate, extend or add further accommodation in the future, subject of course to council approval and other requirements.

Compare that with a property on a compromised block with limited usability and you can start to see why simply comparing suburb medians doesn’t tell the whole story.

The property itself matters

Floor plan, bedroom sizes, natural light, parking, outdoor space, accessibility and overall functionality can make a substantial difference.

We’re not necessarily looking for the prettiest property.

In fact, sometimes a dated property with good fundamentals can be more appealing from an investment perspective than a beautifully renovated home where you’re paying a significant premium for someone else’s improvements.

The question we keep coming back to is:

Does this property have the fundamentals that future buyers and tenants are likely to value?

Scarcity matters

We also consider how easily a property can be replicated. If there are hundreds of similar properties available within the surrounding area — or significant potential for more to be built — buyers may have plenty of alternatives.

On the other hand, properties with characteristics that are harder to replicate can potentially benefit from stronger competition when demand increases. That might be the land component, location, property type, outlook, school catchment or simply a particularly tightly held pocket.

Understanding these differences at a local level is an important part of assessing a property rather than relying solely on suburb-level data.

Price still matters

You can find a great property in a great suburb and still make a poor investment decision if you pay too much for it. This is where emotion can become dangerous.

Understanding comparable sales, current competition and the property’s fair value is critical.

Sometimes the right decision is to negotiate aggressively. Sometimes it’s to pay a little more for a genuinely scarce opportunity.

And sometimes the best decision is to walk away.

Look beyond the postcode

Choosing the right market is important. Choosing the right suburb within that market is important. But that’s not where the research should stop.

At Sharp Property Buyers, we work with home buyers and property investors on the Central Coast and across Australia. Our approach is to assess the bigger picture — from the market and suburb right down to the street, land and individual property.

Because ultimately, the suburb might get you into the right market, but the property you choose within it can have a significant influence on the result.

Sharp advice, lasting results.