The key to capital growth in property is resale value. So, how do you determine what sort of property is likely to sell well in the future?

As a general guide, we recommend you look for the following features when considering whether a particular property is likely to be an above average performer in the capital growth stakes.

1.  An architectural style that is compatible with the area. For example, a Victorian terrace in Paddington is something that the majority of buyers in that area are looking for. So a 1980s cottage in the same area, no matter how nicely presented, is always going to attract less interest from buyers.

2.  A good, quiet street – not a main road. Tree-lined is the ideal, within an easy walk to amenities and public transport. In every suburb there are specific streets that carry a certain cache – and buyers are often prepared to pay a premium for these addresses. Just think of Telegraph Road Pymble.

3.  The ideal aspect is a garden facing north or north-east. If buying a semi-detached house, look for the one where the windows are on the northern side. Good natural light is what you are after, particularly in the living areas and garden.

4.  The floorplan needs to make sense, with good flow and balance. An unbalanced house would be one with 4 bedrooms and a tiny living area or limited outdoor space. An example of poor flow is where you have to walk through the laundry to get to the courtyard, or where the bathroom comes straight off the dining room. The only exception to this rule is if the floorplan can be simply rearranged without significant structural work.

5.  Parking is always preferable to no parking, however there are many inner city areas where there simply isn’t the availability. So in the absence of off-street parking, make it is easy to get a space on the street.

6.  Aussies love to live alfresco, so usable outdoor space is always a big plus for resale value.

7.  Good property doesn’t always have a view, however the best properties do have some sort of outlook. This can be as simple as ensuring each window looks out onto garden. You could plant a climber so you look at greenery instead of looking at fence palings. Or a row of bamboo or pine trees to obscure the house next door. If you can’t obscure an ugly outlook or rectify a privacy issue, don’t buy the property.

8.  Presentation of properties for sale can be misleading. It is easy to fall in love with the appearance and trimmings of a styled property and fail to see the nuts and bolts of what is actually for sale. Conversely, it is just as easy to overlook a fundamentally good property simply because it hasn’t been tarted up for sale. In fact, you might be able to add immediate value simply by addressing the presentation. Great examples are tenanted properties and those owned by older people who have dated colour schemes and furnishings.

9.  The condition of the property can set it apart. A well maintained property will need less money spent on it that one that has been neglected. And any savings you make in upkeep go straight to your bottom line come sale time.

When taking into account these general attributes, it is important to note that every micro-market has its quirks and it would do you well to understand these. For example, a weatherboard house in Balmain is not going to be worth less than a brick one, but in more recently developed areas there will be a significant price difference. If you understand the primary elements of a good property and combine this with local knowledge, you should be well on the path to a successful real estate investment.

There is possibly no buyer more nervous than a first home buyer. Not only are you scared about what having a mortgage is going to do to your quality of life, but there are high stakes in getting on the first rung of the property ladder. After all, a bad move can cost money if the property’s value drops. Almost equally disastrous is the opportunity cost of a property that does not grow in value, or doesn’t match the median growth rate for that suburb. Not only are you looking for a home, but something to leverage off in the coming years when your growing family demands a larger abode.

So, how do you buy a property that is going to out-perform the median growth rate for the area? The obvious answer is to engage professional help. We hand-hold many first home buyers through this exciting phase of their lives and find it extremely rewarding. But budgets are usually tight and there are many young people out there who we cannot convince to part with the funds required to engage our services. So, if professional help is not an option, you will need to do the research yourself. Really get to know your chosen market and see for yourself which properties attract a lot of buyer interest and which ones don’t. You will probably have to compete harder for a property that will perform above the median. The duds will be pretty easy to buy…

Basically if you look at any ladder, the goal is to get as high as possible. If you can reduce the steps (by making the rungs further apart or by taking two at a time), then you are going to save money in the long term and climb higher in a quicker timeframe. The costs of buying and selling are so high that it makes sense to reduce the amount of property transactions over your lifetime. So the longer your first home will suit your needs, the better.

We often hear advice given to first home buyers to stretch yourself as far as you can afford (get used to being uncomfortable!) as the time before you have kids is the best time to build a solid foundation in the property market. This could set you up to be much more comfortable in future years for two reasons. Firstly, you may not need to upgrade so soon if you buy the largest home you can afford now. But you need to make sure it is in a good area. Alternatively, if you stretch to buy in the best area that you can afford, then you will have a greater chance of higher capital growth than if you compromised and bought in a lesser area. Sometimes, however, you will need to buy a smaller property in order to achieve this.

In his “Property Watch” column in last weekend’s Sun Herald, Mark Armstrong gave some advice along these lines. “Your first property is arguably the most important because, if you choose wisely, this asset will be the one that will set you on your way to building substantial equity through capital growth… When affordability is a pressing concern, it’s far better to buy a smaller property in a high capital growth area, than a larger property in a lower capital growth area.”

We firmly agree.

When I was a selling agent I learnt that buyers become experts in their price bracket for the period of time in which they are seriously looking for a property. They have an intimate knowledge of what they can get for their money in a way that a local real estate agent can’t. The agent has to be abreast of all property types in their geographical area, and across all price points and as a result, their knowledge will always be a little more general than that of the avid property hunter.

You, as a buyer, will most likely have personally inspected every property that vaguely suits your requirements, including those slightly above and below your budget. After a period of intensive property searching, you will probably know instinctively a property’s value immediately upon entering the front door. You will also get to know the most active selling agents in your area and begin to glean additional information from them.

But this knowledge does take time to accrue. It can be extremely useful when it comes to negotiating a deal and can help you to avoid making a poor property purchase. Our advice is to always make a decision after acquiring as much knowledge as possible about your chosen market. But if time is not on your side and you have found the perfect property, be aware that the lack of knowledge may cost you – either by missing out on your dream home or you by succeeding in securing it by paying a premium price. Maybe time to call in the professionals…