The old adage that “land appreciates while buildings depreciate” can prove true in the right location.
More Australians are swapping traditional quarter-acre blocks for apartment living, but experts say they could be missing out on substantial capital gains.
It’s the old adage that “land appreciates while buildings depreciate”, and backyards also give owners the option to add value and expand their home by installing a pool, a garage – or, if space permits, a tennis court.
Hockingstuart sales manager in Mentone, Simon Wendt, expects house price growth to continue to outstrip units as homes on a full block of land become more rare.
“Even if you need to pay a little bit more to get something with a backyard, it is going to be a lot more valuable in the future,” he said.
Domain Group data shows the national median house price grew 9.4 per cent over the year to September, while units climbed just 6.8 per cent.
But just like anything in real estate, location is key.
Valuer and buyer’s advocate Greville Pabst, of WBP Property Group, said land in the inner-city areas of Melbourne was particularly attractive and becoming more scarce with the amount of medium and high density developments.
Mr Pabst said those properties with a backyard, or land around them, would be more in demand and appreciate better in value.
“Land is the key attribute that drives value, so the more land that is ascribed to a property, generally the more valuable the property,” he said.
“[If] you can drive in via a laneway at the back or side and you can bring a car off the streets, that certainly does ascribe value to a property”.
He said backyards with enough space to accommodate a storage or garage would also appeal to many people.
Five Squared developer Ashley Lewis, who has developed several large homes in Melbourne’s south east, has seen more first and second-home buyers being lured to the outer suburbs for the “backyard lifestyle”.
“To get a home at an affordable price where you can get that backyard, people are now looking at these outer-suburban land subdivisions as a viable and really the only alternative to having that backyard lifestyle that people want,” he said.
“A lot of the buyers want a block where they build a nice home centred around a garden with a nice alfresco area, and designed to make maximum use of the garden space.”