Why do Character Homes get the Best Returns?
Why is it that character homes or lifestyle homes get the best returns and why is it that they outperform the market place? Well the reason is quite simple. It’s based on the popularity.
Let me explain what I mean by character homes and also lifestyle homes. So character or period home have ornate features, they represent strong statuses, they normally located in great areas and there’s consistency around that type of property – beautiful tree lines street in really great areas of Melbourne and Sydney. When they come up, they are scarce items but they also have this mainstream appeal. Now when I talk about lifestyle properties I’m not talking about rural farms and that kind of things – they are actually being design for entertainment. The new trend, well it hasn’t really been a real new trend, probably in the last 5 years, is people are doing more of that alfresco dining, that indoor outdoor area. And that type of being able to visualise yourself in these home and seeing that character, the grandeur and statuses that is giving us that emotional connection with it.
I often reference it to Top 40 music.
Now by that I mean, it got a connection. We don’t know why some songs are hits and others aren’t but there’s usually a common beat or a sound that comes with that that we all gravitate to. So when all of that popularity is there and that gravitation to the property is there, we have a lot of interest. And when we have a lot of interest, we obviously get an outperform result. So I always use an analogy of let’s say we put a hundred people on the bus and we are driving up and down two or three different streets and we’ve got character homes over character homes and you know, renovated beautiful home and then we’ve got these indifferent or independent sort of property that is being architecturally design and 90 people on the bus go.. don’t really like it but there’s always the rest that says you know what, I don’t mind it. It makes a little bit of statement. That’s a bit like the Top 40 music. You’ve got that sort of alternative and then you got your mainstream music.
So the reality is, mainstream music sells a lot better than the independent alternative music and that’s the same with property investment. You don’t want to get that property that is in the now zone and is being architecturally built but it is quite boxy and is going to date as opposed to having that character home where you’ll get a great outperform result and they’ll be a lot of interest in that asset over the generation. And you’ll see the value of your house, not just the land component but the value of the house actually adding to the results you get come the sale day. So I always sort of say that there is a connection between interest and demand and that’s the connection with mainstream music.
Thanks for watching.