How much of a "discount" for being on a main road?

S

Sunder

I'm inspecting a property tomorrow, 1200sqm, on a main road, currently a fibro house and a granny flat, ready to be pulled down on both.

I did a quick check and the price of the property and it does seem fairly aggressively priced, but I decided to do a bit deeper research.

This place is asking $389k.

6 months ago, a house on about 700sqm, only 200m away, but down a side street (quiet) sold for $420. So I thought 30k was a decent discount for being on the main road, and getting an additional 500sqm of land.

But 12 blocks down, on a 800sqm block of land, a much better house (Brick - not sure if veneer or double) is a house sold for $320k.

The thing is, the land is very deep, not very wide, so not great for subdividing. That's not too bad as I wasn't sure if I wanted to battleaxe or just build a bigger house very recessed back to avoid traffic noise. So I'm not sure if the asking price is realistic.

There just arent enough comparable properties to take an estimation. Any advice?
 
The advice I got from a property manager early on was -


No prospective tenant ever asked me for a house on a main road.
 
keithj said:
The advice I got from a property manager early on was -


No prospective tenant ever asked me for a house on a main road.
Click to expand...

Not bad advice - having lived on Falcon Street, Crows Nest, I know I will not do that again myself. However, the fact that the apartment was filled basically the first person who inspected it says to me that plenty of people are still willing to live in it for the right "discount".

In terms of how big that discount is though, that's what I'm trying to establish what "the market" says.

Either way, I am going to play hard ball, since it's a buyer's market at the moment, but if he's already way out of the ball park, the playing hard ball will be a joke.
 
Depending on area, i would have thought 10%-20% discount for being on a main rd. For a 1200m2 block I would have thought a 10-20% premium minimum if the block falls within council guidelines for subdivision. Check the requirements for Torrens/Strata title developments with council and you may have found the reason why its dearer than an 800m2 block. 1000m2-1100m2 seems to be a magic number for alot of councils for minimum area for subdividing but the do like wide blocks too.

Worth a phone call to council

Tennants may have never asked for a property on a main rd, but I bet you they ask for a cheaper place all the time.
 
My Golden Rule No. 1

My Golden Rule: Never buy on a main road.

You buy cheap . . you sell cheap.

Regards Jo
 
josko said:
My Golden Rule: Never buy on a main road.

You buy cheap . . you sell cheap.

Regards Jo
Click to expand...


that's right - to a point.

main roads properties still appreciate with the suburb though.

so while a property may be $90k instead of $100k, a 10% discount, if the suburb is suddenly worth $500k then you'll be selling for a 10% discount at $450k.

the sliding scale margin of difference gets bigger as the values increase, but if you're aware of this and can structure around it, you can still make a very tidy profit.

food for thought. :cool:
 
Agree with Blue and Boom. If you buy at a discount, you'll expect to sell at a discount - but the property will still rise with the market, especially so if it's a desirable suburb/area.
 
Sunder said:
I'm inspecting a property tomorrow, 1200sqm, on a main road, currently a fibro house and a granny flat, ready to be pulled down on both.

I did a quick check and the price of the property and it does seem fairly aggressively priced, but I decided to do a bit deeper research.

This place is asking $389k.

6 months ago, a house on about 700sqm, only 200m away, but down a side street (quiet) sold for $420. So I thought 30k was a decent discount for being on the main road, and getting an additional 500sqm of land.

But 12 blocks down, on a 800sqm block of land, a much better house (Brick - not sure if veneer or double) is a house sold for $320k.

The thing is, the land is very deep, not very wide, so not great for subdividing. That's not too bad as I wasn't sure if I wanted to battle axe or just build a bigger house very recessed back to avoid traffic noise. So I'm not sure if the asking price is realistic.

There just aren,t enough comparable properties to take an estimation. Any advice?
Click to expand...

Hi Sunder,

I guess the question is 'What do you want to do with the proper ? It's true that the main road properties are generally 10-15% cheaper than their back road siblings. I did buy a property on the mail road. A few points :

1. In terms of percentage growth, it has appreciated at the same rate as my PPOR (same suburb, similar sized block).
2. I bought it almost 20% cheaper.
3. The plan is to convert it into a student accommodation as it is near to O'Bahn and the bus stop.

Cheers
 
Those IPs of mine that are on main roads have appreciated the most. The least appreciated one is more than doubled in 5 years, the greatest performer 150K in 2000, 1M now. I will continue to buy on man roadsas long as the price and the location is right.
Never have problem renting them out as they are cheaper than most houses in the area.
Edit: sorry I did not address the original question, hard to say "how much of a discount" , how much is it worth to you is the main question (i have never been able to purchase at a "bargain" price because once i see the value I don't dance the bargaining process too much. I am not saying it is the right way, just me).
Regards.
 
Last edited:
Depends on what your definition of main road is. Are we talking primary, secondary or collector roads? (Melway definitions). Being on a secondary road could be easier to develop for example than on a local traffic street.

Of course if you are buying a PPOR, then a primary or secondary road could be less desirable. Depends on your strategy or intent for purchasing.
 
Main rd properties are usually in high demand by people who run any sort of home business, and want good exposure. And with regards to noise - a lot of people live under flight paths, and it doesn't affect values/rental returns of those properties very much (although it will be hard to make a proper comparison)
 
Hi Sunder,

I guess the question is 'What do you want to do with the proper ? It's true that the main road properties are generally 10-15% cheaper than their back road siblings. I did buy a property on the mail road. A few points :

1. In terms of percentage growth, it has appreciated at the same rate as my PPOR (same suburb, similar sized block).
2. I bought it almost 20% cheaper.
3. The plan is to convert it into a student accommodation as it is near to O'Bahn and the bus stop.

Cheers
Click to expand...

I'd agree with this.

Main roads in the middle of nowhere dont offer much advantage but main roads near amenities could be a good proposition
- more likely to get the nod for subdivision
- the easy walk to amenities could give you multiple desirable units
 
Main roads - great stuff

We love main roads. We seek them out. We pay extra for properties on main roads. If the property is on a quiet street....we don't buy. Hopefully it's on 2 main roads, or better still 3 main roads.....or blissfully, surrounded by 4 busy main roads and is a virtual island.


Note :

1. Property is a big and varied, all encompassing term.
2. We aren't normal.
 
i found that i'm also always looking for main rd locations
have one IP on main rd directly opposite a local shopping centre, with a bus stop to the city about 20m from the driveway, and looking for a similar like that
 
Strannik said:
Main rd properties are usually in high demand by people who run any sort of home business, and want good exposure. And with regards to noise - a lot of people live under flight paths, and it doesn't affect values/rental returns of those properties very much (although it will be hard to make a proper comparison)
Click to expand...

We do live under a flight path :mad:. Never realised it until we had a party and all our friends told us that its the 10th plane passing over :) Now every time i flying interstate, try to locate my house from the plane. :D
 
Interesting to read everyones views on main roads.

I think it very much depends on the main road. At the moment I keep looking at a particular place for sale on one, so wouldn't mind opinions.

Present PPOR is much nicer and in a better location, BUT it's layout drives me really insane. Would probably need another 100K to get it as I like.

Still have a morgage on that of 85K, but if we sold and bought this

http://www.realestate.com.au/cgi-bi...er=&cc=&c=16552545&s=sa&snf=rbs&tm=1212854692

after all costs, would not only save spending 100K (giving us a new debt of 185K), but would have 60 to 80K cash left over - minus some for french doors to kitchen and landscaping of gardens (husband is a landscaper :D).

My husband seems to think moving down is a backward step, but if we bought at the discounted price (for it's main road location) I don't see the problem. As long as we're happy to live there.

House sits well back from this road, and it's very rare to see any heavy vehicles. Thought I'd post the link because it's unlikely that we'd buy it, since my husband is not keen, however was curious to see if others thought this kind of step is a false economy.

Any left over funds would go towards investing ofcourse.

Firstmillion, I don't mind flightpaths, as long as they are not too deafening, and I can still hear myself speak.
 
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