Tuesday, August 27, 2013

Save $400,000 by Going Next Door

As you look for a new home, it often pays to think a little different to the many other homebuyers. An excellent article highlighting this appeared in the Daily Telegraph. They showed that a homebuyer can save a significant amount of money by buying into a suburb next to a more popular one. For example, those who purchased a property in Thornlie could pay their mortgage off 17 years and four months sooner than those in neighbouring Canning Vale and save $194,853 in purchase price. They would also potentially save $190,721 in interest repayments over time!

A while ago, I received a newsletter from Seth Godin, which illustrates this idea. 

"Every morning, the line of cars waiting to get onto the Hutchinson River Parkway exceeds 40. Of course, you don't have to patiently wait, you can drive down the center lane, passing all the civilized suckers and then, at the last moment, cut over. Drivers hate this, and for good reason. The road is narrow, and your aggressive act didn't help anyone but you. You slowed down the cars in the lane behind you, and your selfish behavior merely made 40 other people wait. 

This is a different act than the contribution someone makes when she sees that everyone is patiently waiting to enter a building through a single door. She walks past everyone and opens a second door. Now, with two doors open, things start moving again and she's certainly earned her place at the front of that second entrance. 

Too often, we're persuaded that initiative and innovation and bypassing the status quo is some sort of line jumping, a selfish gaming of the zero sum game. Most of the time it's not. In fact, what you do when you solve an interesting problem is that you open a new door. Not only is that okay, I think it's actually a moral act. 

Don't wait your turn if waiting your turn is leaving doors unopened." 

Have a look at this table and see if this changes the way you think about buying a home in Perth.

HOUSES
RANKPOPULAR SUBURBMEDIAN VALUEHIDDEN GEMMEDIAN VALUE$ SAVING% SAVING
1Scarborough$700,173Innaloo$618,891$81,28211.6%
2Fremantle$802,051O'Connor$572,144$229,90828.7%
3Mt Lawley$929,428Highgate$678,530$250,89927.0%
4South Perth$1,038,277Victoria Park$623,090$415,18740.0%
5Canning Vale$626,973Thornlie$432,120$194,85331.1%
6Subiaco$1,155,047West Perth$709,723$445,32438.6%
7Como$702,191Bentley$501,376$200,81528.6%
8Maylands$598,708Ashfield$496,997$101,71117.0%
9Dianella$635,811Morley$518,317$117,42418.5%
10Bayswater$617,172Eden Hill$439,378$177,79428.8%

UNITS
POP. RANKPOPULAR SUBURBMEDIAN VALUEHIDDEN GEMMEDIAN VALUE$ SAVING% SAVING
1Scarborough$584,153Churchlands$433,238$150,91525.8%
2Fremantle$586,922White Gum Valley$361,959$224,96338.3%
3Mt Lawley$400,509Glendalough$324,219$76,29019.0%
4South Perth$601,106Victoria Park$480,272$120,83420.1%
5Canning Vale$411,932Langford$302,088$109,84426.7%
6Subiaco$660,165Wembley$351,859$308,30746.7%
7Como$502,607Bentley$430,867$71,74014.3%
8Maylands$380,194Coolbinia$357,032$23,1626.1%
9Dianella$419,550Mirrabooka$297,154$122,39629.2%
10Bayswater$409,077Bassendean$384,679$24,3986.0%
Source: realestate.com.au, Westpac and RP Data

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