Would you pay $100K more for the right property?

Nerida Conisbee from realestate.com.au tells us about a study amongst 28,000 highly engaged listings on their site they used to come up with Australia’s ideal home. She also tells us why buyers are willing to pay $100,000 more if they find it.
Kevin:  The ideal home is a concept that varies for different people, but if you had to design the most statistically sought-after home in Australia, what would it look like? Now we can tell you, because RealEstate.com.au has done some research, and they’ve come up with the answer for us. Joining us to tell us what that might be, chief economist for the REA group, which is the parent company of RealEstate.com.au, Nerida Conisbee.
Nerida, what does the ideal house look like?
Nerida:  What we did is we had a look at the most popular searches on RealEstate.com.au. We have about five million people searching every month, and we saw some really distinct trends as to the types of things people are looking for in a new home. So what does a perfect house look like? It’s bigger, it has more bedrooms, two bathrooms, two garages, and it’s on quite a big block – on a block of around 665 square meters.
Kevin:  It’s interesting when we look at so many contemporary homes around Australia now being constructed on smaller blocks of land, too. We want both. We want both the bigger house and the bigger block of land. Is it realistic, Nerida?
Nerida:  When we have a look at the size of new blocks, they’re typically around 480 square meters, so it’s probably not realistic. I think 665 square meters would be considered a very large block at the moment in Australia, and certainly for new homes, you’d probably be unable to get a block of that size. You could possibly get one, but you’d certainly be paying a significant premium to access it.
Kevin:  Yes, there aren’t too many places in Australia where you can get a 600 square meter block. Did it vary much around Australia? In other words, were the styles of houses different in Queensland, New South Wales, and Victoria?
Nerida:  Yes, it was interesting. Tasmanians were looking for the biggest blocks. They were looking for around 750 square meters. South Australia, Queensland at around 680, and New South Wales were the smallest. They were looking for under 650. So it did vary across states.
The size of the home also varied quite a lot. If we had a look at the southern states – Tasmania, Victoria, South Australia – they were typically happier with smaller homes – so three bedrooms – but if we look to the warmer climates, particularly New South Wales, Queensland, and Western Australia, they were looking for four bedrooms, so bigger homes in those states than what we saw in the southern states.
Kevin:  Can you line that up with lifestyle? In other words, for instance, in the warmer climates where they’re looking for bigger homes, would that include more outdoor entertainment areas?
Nerida:  Not particularly. If you have a look at New South Wales, they were quite happy to live on small blocks that have big homes, so it wouldn’t really suggest that they’re wanting more outdoor areas than, say, Tasmania. It probably has a little bit to do with the cost of land in those areas, but it was certainly surprising that people in warmer climates want more bedrooms, because that was probably the key finding, that they’re wanting an extra bedroom for whatever reason, and it was more apparent in warmer climates.
Kevin:  With everyone wanting bigger and better, Nerida, are they willing to pay more for it?
Nerida:  Yes, they certainly are. The median house price at the moment in Australia is $550,000, and people were prepared to spend an extra $100,000 on getting a bigger home. It varied again across each of the states.
If you have a look at Western Australia, they were the most likely to spend more on their homes relative to the median house price. I think the median in Perth right now is around $495,000 and they were prepared to pay around $700,000, so willing to spend a $205,000 premium. The premium that Queensland residents were prepared to pay was less. I think the median in Queensland now is around $470,000; they were prepared to pay up to around $550,000. There was a bit of regional variation, but on average, around $100,000 more to get a bigger home.
Kevin:  What about first-home buyers? Are they willing to sacrifice, or do they want to go straight to the perfect home?
Nerida:  We didn’t specifically look at first-home buyers. It would be interesting to have a look. I think for many of them, they would be priced out of the perfect home. If you have a look at what happened to house prices nationally, and if you have a look at what happened to affordability, it’s getting quite expensive to access major markets, but it would certainly be something that we would like to have a look at, to see whether first-home buyers are getting what they want in the market. It would be an interesting further study, I think.
Kevin:  Have you got any figures on how many people in Australia are dissatisfied with the home that they’re currently living in?
Nerida:  Yes. The Australian Bureau of Statistics data has shown that around 50% of households are dissatisfied with the size of their homes. That’s quite consistent with our findings. It’s showing that at least half of households want to live somewhat bigger, and certainly, these findings are showing that more bedrooms are very much sought after, as well as a bigger block of land.
Kevin:  Great talking to you. Nerida Conisbee from REA, thank you so much for your time.
Nerida:  Thanks, Kevin.

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