14 October, 2022 / Category: Blog
A-Grade Properties: What to look for and why they are important.
The term A-grade property is frequently used in the media and by our team. Understanding what makes an A-grade property becomes increasingly important as the market softens. All properties sell in a rising market, but in a softening market, B and C-grade properties can be more challenging to sell and often have the most significant fall in value.
As we always say, there are markets within markets, and right now, the A-grade property market is performing very differently from the b and c-grade property markets.
So what is an A-grade property? A-grade properties tick all the boxes for their prospective buyers. They are not always the most expensive properties. Depending on their location, two A-grade properties may have very different price points. However, the fundamentals underpinning the property’s value are still the same.
What makes a property A-Grade?
For a property to be classed as A-grade, it needs to tick all the boxes, from location and design to size and aspect; when a buyer stumbles upon an A-grade property, they rarely need to make any compromises.
Quality: A-grade properties are quality builds in good condition.
Scarcity: If many buildings are the same as yours on the market at the same time, it could undermine the value. Period homes are scarce and have high buyer appeal. Therefore A-grade properties are often period or unique modern architecture.
Aspect: A property with a northern orientation is always the most sought-after because it provides abundant natural light. Western-facing yards are still popular and prove a very strong second option.
Floor plan: A-grade properties tend to have a well-thought-out floor plan which flows throughout the house.
Land size & ratio: An A-grade property has a good-sized block of land with an appropriate land-to-building ratio (i.e. no large buildings on small blocks).
Location: A-grade properties are generally located close to other A-grade properties on quiet, well-maintained streets. The location must offer proximity to transport, amenities and open spaces.
Positioning: The position of the proeprty on the block is important, if the home has a heritage overlay and you property is at the rear of the block then the front yard is your only open space, taking away from the property’s market appeal.
What should a buyer not compromise on when buying an A-grade Property?
There are some aspects of a property that you can change via a renovation. However, a property’s aspect, size and location cannot be changed. Therefore we always advise clients to avoid compromising on these factors where possible.
Is it ever a good idea to buy a B or C-grade property?
Sometimes, budget restrictions and lifestyle requirements mean our clients must buy a B or C-grade property. When this happens, the most important thing to consider is the property’s value; you don’t want to pay A-grade pricing for a B-grade property. The growth rate is very different for each property group, so considering this when putting a value on a property is also important.
Let’s start by looking at B-grade properties.
Well-located properties needing renovation might get a B. In this instance, the property may be a great buy if you are in a position to renovate it and turn it into an A-grade property.
B-grade properties generally have most of the correct fundamentals. For example, they might be in the right suburb but not quite in the area that buyers prefer. Or, they might lack off-street parking.
What about a C-grade property?
In most instances, Infolio advises our clients to avoid buying these properties. They tend to be located on busy streets, near undesirable dwellings such as commission housing, commercial areas or high-density growth zones. They may also lack any real outdoor space or natural light, or have a poor outlook (i.e. look into a large block of apartments), all of these issues will result in the property suffering upon re-sale. Even with significant renovation, C-grade properties still wouldn’t meet the standards of an A-grade or even B-grade property.
8 Lyell Street, South Melbourne.
Infolio secured this stunning period home in South Melbourne for our clients last weekend. The property is located in the heart of South Melbourne, near transport, retail amenities and walking distance to the South Melbourne Market. Our valuation priced the property at about $2.1 million and we were able to secure it at auction for slightly under $2m.
We secured this stunning, 5-year-old contemporary home in the heart of Elwood off-market. The property features four bedrooms, three bathrooms and two car spaces on 376sqm of land, a rare find in this tightly held pocket of Elwood.
Our client lives overseas, so we worked closely with them to facilitate live video walk-throughs of the property and an in-depth analysis of the area.
Contact us today to find out how we can help you find an A-grade property.