PHOTO: Monopoly. FILE
I recently did something I haven’t done for a long, long time. I played a game of Monopoly.
And yes, I won. But I played it with my grandchildren, so I had an unfair advantage.
Now the game reminded me of a very important lesson all property investors must understand – and this is that not all real estate is equal.
You see, everyone wanted to buy Mayfair which is the most expensive street on the board, but no one really wanted the cheap locations at the other end of the board, the names of which I don’t even remember.
Then there are other locations on the monopoly board, some of which were more desirable than others.
And it’s the same in real life.
Not all real estate locations are equal and just like there are different precincts on the Monopoly board, there are basically four types of location where you could buy properties in the real world.
And as you’ll see a lot has to do with the demographics of those who want to and can afford to live in these suburbs.
1. Discretionary Locations
These are the most expensive locations in our capital cities – the “established money” locations where most of the residents have lived for a long time and where many residents have paid of their home loans years ago.
In general, these locations are the established inner ring suburbs of our capital cities or suburbs close to water.
Think of Toorak, Brighton or Kew in Victoria, Teneriffe or New Farm in Brisbane, and Darling Point or Bellevue Hill in Sydney
Over the long term this sector of the housing market outperforms the other segments, in part because of its scarcity, but in particular because, as we know, the rich are getting richer than the average Australian and they can afford to, and are prepared to, pay a premium to live in these prime locations.
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