Old suburbs next to new eststes

Hi Celeste,
I just did the same thing, purchased an old house on a big block that is flanked by a 45 degrees of a new housing estate (with man made lake). I’m really curiouse to see what flow on effect this will have on existing prices. We bought a few months ago and there is another house 2 doors down (same as ours) on the market on the market for an extra $25k. Sorry I’m not much help. Looking forward to hearing from the others [headphone]

An old suburb near new ones does inherently get pushed up in price.. not to the same amount. It takes a while for the older suburb to have renovs done, new buildings built in it so their new products can be similar to the new suburb. There is some kind of critical mass that needs to be reached before the price is drawn ever upwards towards the new suburb.

Inherently a new suburb will always be worth more as the “materials” used to build are worth more than the shacks on land in the old suburb…. New homes can be between $100K to 300K in addition to land value. The older suburb cant compete with this economically until development and upgrading occurs in the older suburb. Tjhis older suburb will do better than a group of older suburbs together.

Look at the areas surrounding Canning Vale as it grew.

Gosnells has had lots of new development over past 5 yrs. MAddington, Kenwick etc.. have been propelled upward but land there is still at a discount of 20% or so to Gosnells.

A large reason why this happens is econimics.. the multiplier effect of income/money. That is why money spent in building, roads, new public buildings make a huge difference as the people working on these projects have a % of income spent in the community which makes the community wealthier. These people then reno thier homes, buy plasma screens, pools etc.. which moves a suburb from below average to a Claremont, Mt lawley or Freo.

Location factors of water etc.. do make a difference but the economics is a way to predict new growth areas.

I would say your property would have a greater than average chance to grow howeve it may not happen straight away. Another issue for you is that sales evidence at the higher level needs tobe attained to get a genereal jump in price. E.g 4X 2 needs say 5-10 sales at the higher level for valuers and agents to icnrease their value of the area. It takes a while for people to talk up the value… each home talks to friends, banks agent and valuers trying to increase value. Part of the lag is due to the fact not everyone sells they refinance at higher valuation but banks dont like revaluing 4 times a year. Therefore a time lag occurs all along the chain.

PArt of the challenge is to work out how long public works/ development approvals will take place. A Town pLanning Scheme can take 2-6 years to be approved so a suburb can be on hold during this time. IT will increase at some point but you couldbe wating a while. Understanding the policitcal factors and public sentiment in an area can make a big difference to the timing of these events as well as manpower. E.G gosnells council at the moment is overworked and all projects are being put back and back as not enough staff. In 2006 they are implemneting a new computer system across the board which has drained a lot of hours from staff.

I recommend even if you do not develop to find out information relevant to this strategy as if gives you more insight into what is happening in a suburb and you gain better idea of how long new roads, schools, shops (and new business to fill them) takes.

Taking a regular drive through Ellenbrook since it started would be a good idea to see how an area develops… it now has a Dominos, Shopping Centre etc.. and lots more shops to come but intially these did not exist. The company’s who provide franchises etc.. in these new areas wait until there is sufficient population and income to support X sales of pizzas etc.. to support a franchise. Let these companies do all the marketing research for you.

Good luck

Ryan

Hi again Celeste,

I have a feeling you are looking at the area which I just bought a house in. If so then the land area being developed is approx 1km squared of the total suburb which is about 3km squared and is southern coastal.
Plans approved for various beachside residential in progress, new free bus link to connect ammenities (like shopping center), sports facilites, lifestyle retirement villas, marina on the cards etc.

If it’s the same place, hope this info helps.

Fantastic! Good luck with your new baby