Build New or Buy Old in Perth, WA: The Case for Proximity
According to a survey commissioned by the departments of housing and planning, 98% of Australians’ want to own their home. As local Perthinians, it’s not a surprising phenomenon.
Home ownership is ingrained into Australia’s culture and tradition; owning a home is seen as financial security and the stability of location helps to build ties with family, friends and the local community. Home ownership even has biblical roots, dating all the way back to Hebrew proverbs.
Buying established property or building a new home is a choice that many Australians are faced with. The factors that influence their decision ultimately comes down to three areas of interest: proximity, timing and purpose.
Welcome to the first post in our build new or buy old in Perth, WA series. It’s aimed to go into more depth about the pros and cons of proximity, timing and purpose when buying established property versus building on vacant land in Perth.
Importance of proximity
The importance of proximity to the people of Perth can be traced back to the proximity principle in the school of social psychology. The principle explains that there is a ‘tendency for individuals to form interpersonal relations to those who are close by.’
Human beings are habitual creatures that favour familiarity – this permeates into our decisions to buy close to the city hub, and within neighbourhoods that are close to schools, amenities, shops, hospitals, work and other services – AKA where local communities form and thrive. These are areas where Aussies can bring up their young families and establish a connection with the local community.
Location … again
We’ve written about location and its importance before – here and here – for good reason. For 75% of Aussies, it’s the most important factor when deciding to buy established property. For Perth, most home buyers prefer inner centre and outer central regions of the metro area to the point where they are happy to trade off their preferred housing type for the opportunity of location.
For example, easy access to public transport to the CBD is essential for city workers.
However, this does not make buying established property affordable. While Perth planners are currently working on creating higher density infill targets inside the inner metro, it currently has not offset the cost of housing heightened by investing Baby Boomers.
Furthermore, character or period homes closer to the city will attract a high premium on the market – the same with areas that are on large blocks of land or with river or beach views.
Perth as an urban sprawl
Perth is considered an urban sprawl city. Urban sprawl cities are known by the rapid expansion of the geographic extent of cities, characterised by low-density residential housing, single-use zoning and a heavy reliance on privatised vehicles for transportation.
Although Perth has a great public transport system, the majority of Perth arguably owns and drives their own vehicles to get between A and B (refer to the Kwinana/Mitchell Freeways at any time of day). We have far fewer apartment complexes than high density cities of Singapore or Tokyo, and despite planners implementing re-zoning projects, Perth is still a primarily single-use zoned city.
The existence of large, vacant blocks of land in Perth’s inner-city suburbs are rare. And those for sale in the inner-city region are increasingly expensive: for example, a vacant 850sqm block in South Perth is currently seeking offers in the ‘high 1 millions’. This has first home buyers, who want to build, turning to the outer fringe of the metro and developers taking advantage of the ever-expanding Perth urban sprawl.
Is the urban fringe worth it?
Three quarters of all new developments are on the urban fringes of the Perth metro and are far more affordable than some established properties. Although the prices of vacant land in new developments are attractive, potential buyers will need to research the development to determine future amenities in the area. Will there be easy access to public transport, hospitals, or schools?
These developments specifically target young families who cannot necessarily afford a home in the inner metro region. But it begs the question: should home buyers sacrifice proximity for lower cost?
James Eggleton, sustainability researcher, told WA Today that while building on the fringe was more affordable, ‘hidden by that phenomena is the cost of transport, the cost of the school that’s four suburbs in.’
All in all, some key points to take away are:
Proximity is important to Aussies, interpersonally and geographically.
The location of an established property and its proximity to amenities, infrastructure and services can turn the tide over building new
Building new houses on the urban fringe is not necessarily the best decision when based primarily on affordability
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