Now that some of the heat has come out of the market, it is a good time to look at some longer-term architectural trends and their impact on property prices.
Although land value remains paramount, architectural styles can have a significant effect on capital growth, particularly if a purchase is made before the style becomes popular.
Predicting trends in the residential property market, however, can be tricky. It usually takes several property cycles before solid patterns emerge. Now, for example, mid-century architectural styles are becoming sought after and appreciated as timeless.
Period architecture – Victorian, Edwardian and Queenslander – is sought after for investment, thanks to its scarcity and high land-value locations.
But as these properties become increasingly scarce and prices move out of reach for many, where is the next wave of property styles that will also stand the test of time rather than just being fleetingly trendy?
Remember that 50 years ago, it was hard to sell the average Victorian or Edwardian property; most of the population wanted bigger, more modern lifestyle properties in the middle-ring suburbs instead.
Times have changed, with movement back to inner urban areas and the resultant fierce competition for what have effectively become property “antiques”.
The interesting consideration about viewing these period properties as antiques is that although most buildings depreciate over time, these coveted gems are appreciating thanks to the finite supply of buildings and available land. This delivers the double whammy of valuable building and valuable land.
Finding the next wave
Investors who feel squeezed out of this more rarefied zone will naturally look for the next wave of architectural styles that will deliver long-term capital growth.
To determine what they are, it is necessary to start after World War II. Since properties built from that time are not typically classified as period architecture, the description for anything entrenched in the psyche of the Baby Boomer generation has become known as “retro”.
At the top of the new scarcity list are 1910-1920s California bungalows. These are often found on larger blocks of land and were seen as reasonably affluent when pockets of them sprung up on the fringes of older, established suburbs. They lend themselves to a wide variety of renovations and will generally be in precincts with consistently similar housing styles.
Next, it is worth looking at the 1950s and 1960s mid-century styles. These are the comfortable, middle-class “blonde brick” veneers and the quaint 1940s English clinker bricks that populate leafy suburbs.
They are mostly underpinned by one critical factor – they are generally found in high land-value areas. Much of this type of housing is also in areas with easy access to sought-after educational facilities, good transport infrastructure and leisure facilities.
Good-quality 1950s and 1960s homes are very much in vogue in these locations. An important part of their appeal is that they are spacious, with simple layouts and solidly built, so they can be remodelled relatively easily.
Their uncluttered architectural style also makes them very adaptable. Unlike a situation where a period-style property may undergo an ultra-modern interior makeover – and often destroy its historic character and become over-capitalised – 1950s and 1960s properties can take a wide range of decor and furnishing styles.
Although still emerging, 1970s and 1980s apartments and houses – again underpinned by high land-value locations – are starting to show good growth potential and are an affordable entry point into the market for some investors.
This particularly the case with 1980s architectural styles, featuring exposed timber beams and cathedral style ceilings, which work well with the Nordic aesthetic that has become increasingly popular.
Remember, unlike shoulder pads and stone-washed denim – architectural forms, once in fashion, don’t tend to fall out. Although newer styles come to the fore, older period homes continue to increase in value and appreciation.
Article source: www.afr.com
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