Deciding between property location and size can feel overwhelming, especially when it’s your first home or a big investment. Both can seriously impact a property’s value, but in not-so-obvious ways. Do you go for the smaller home in a prime spot with lifestyle perks, or choose more space in a quieter area? It’s not an easy decision, and it depends on what matters to you. In this article, we’ll break down both sides to help you weigh your options and choose what feels right for you.

Why is location important for property?

Location often tops the list when it comes to property value. A great spot can make a property more attractive to buyers. It’s easy to understand why – where you live affects almost every part of your day-to-day life. Whether it’s convenience, lifestyle, or long-term value, location plays a huge role. Here are some key reasons why location matters so much:

• Proximity to schools : Being close to good schools can make a property more attractive to families, often driving up demand and future resale value. Some families will even relocate to live in a property near their preferred school.
• Access to public transport : Nearby access to trains, buses, or trams makes commuting easier, which can be a big draw for city workers and students.
• Employment opportunities : Properties near major employment hubs tend to hold their value better, as people want to live closer to work.
• Safety : A safe neighbourhood can bring peace of mind. Buyers often prioritise areas known for lower crime rates when choosing a home.
• Local amenities : Having cafes, restaurants, parks, and shops nearby adds to the lifestyle appeal of a location. These features can also boost property prices.
• Future development : Areas marked for future infrastructure projects often experience property value growth. Things like new train stations or shopping centres can increase demand.

Historically, properties in central locations or established suburbs have shown strong value growth over time. For example, suburbs near major cities like Sydney or Melbourne have consistently outperformed outer areas in terms of appreciation. But this doesn’t mean location is everything. Also, past trends aren’t a crystal ball for future market movements. The right choice depends on your priorities – what works best for your lifestyle and goals?

What about the size of the property?

Size matters, especially for liveability and long-term flexibility. Here’s why size is important:

• Lot size : A bigger lot often means more outdoor space for gardens, entertainment, or future extensions. Families may prioritise this for children and pets.
• Internal living space : More square footage inside a home means room for extra bedrooms, larger living areas, or home offices. This flexibility can make life more comfortable, especially for growing families or those working remotely.
• Future expansion potential : A larger property can give you options down the track. From adding another room to improving outdoor features, the space to grow can be a long-term benefit.
• Market appeal : Bigger properties generally attract more buyers, including families and investors. Homes with more space often have a stronger market appeal, especially in suburban or regional areas where space is a priority.

While size offers many benefits, it’s not the only factor. Deciding whether size or location matters more will come down to what’s most important for your current and future needs.

What factors could tip the scale between location and size?

Buying property isn’t just about location or size – other factors can change the game. Market conditions, lifestyle shifts, and regional preferences all play a part.

Market conditions

In a booming market, location often wins. Properties in prime areas can skyrocket in value as demand surges. People tend to want to be near the action. But in a buyer’s market, size could become more valuable. When prices dip, bigger homes in less central areas might offer better value, giving buyers the chance to snag more space for their money.

Lifestyle changes and remote work

The rise of remote work has flipped the script on location. People don’t always need to live close to work anymore. With more flexibility, buyers are looking for space, not just convenience. Bigger homes in suburban or regional areas have become more popular as people prioritise comfort and lifestyle. Remote work has made size more of a priority for many.

Regional differences and social preferences

What matters more – location or size – depends on where you are. In big cities, location often takes the lead because space is limited, and people want to be close to everything. But in smaller towns or regional areas, size can be a big draw. Families might lean towards bigger homes with more space, while singles or couples could prioritise location for lifestyle perks.

How do location and size affect property values?

Property location trends

Recent data shows that properties in prime locations often see stronger price growth over time. In major cities like Sydney and Melbourne, location consistently drives up demand. This pushes property values higher even for smaller homes. Within Sydney’s inner suburbs, even small apartments have seen significant value growth over the past decade. This trend has intensified recently across densely populated cities.

However, in regional or outer suburban markets, size can hold more weight. Larger properties with more land or living space have shown steady appreciation as buyers seek more room. As we hinted at above, this is especially true during lifestyle shifts like the rise of remote work. However, with the growing population, many regional areas are also experiencing strong growth in unit values. This trend shows that location is also a significant factor outside major cities.

Property size trends

Having said everything above, property size is currently playing a greater role in value trends, with a notable shift towards smaller dwellings. This could be because of the widening gap in the average price of houses versus units in Australia. At the time of writing, this price gap has reached a record high of 48.2% and is even more pronounced in some capital cities:

1. In Sydney, the gap is 72.7%, equivalent to $620,272
2. In Canberra, the difference is $401,822
3. In Melbourne, the gap stands at $333,837

There are a few factors that contribute to this widening price gap:

• Rising land values
• Less freestanding homes available to buy
• Increased desire for more space
• Oversupply of units in some areas

Real-word scenarios

Let's look at some specific examples to illustrate how location and size are influencing property values in 2024 :

• Sydney – Parramatta area: In suburbs like Telopea, Dundas, and Newington, unit values have increased more than four times faster than house values. This shows the growing demand for more affordable, smaller properties in desirable locations.
• Melbourne – inner suburbs: St Kilda West, Elsternwick, and Murrumbeena have seen unit values grow by up to 2.7% while house values declined by as much as 5.7%. In contrast, house prices in inner suburbs like Balaclava, Middle Park, and South Melbourne have increased by up to 3%, defying the general downturn.
• Brisbane units jumped by 5.8% compared to 3.4% for houses over a recent three-month period.
• Adelaide units outperformed houses by a similar margin, increasing by 7.1%.
• Perth has had strong overall growth, with a 2.0% increase in dwelling values in a single month.

These trends reveal that different markets can tip the balance between location and size, depending on buyer preferences and local demand trends.

What else should I consider?

Beyond location and size, external factors can heavily influence property value. Things like zoning laws and future development plans are worth thinking about. For example, if a neighbourhood is set for major infrastructure projects like new transport links, it could boost property values in the area. On the flip side, environmental risks, like flood zones, can negatively impact location and size, so it’s important to consider potential long-term risks.

Zoning laws also play a role in what you can do with the property. If you’re thinking about expanding or building, knowing the local regulations upfront can save you headaches later.

Community vibe and local amenities matter too. Being close to parks, shops, and schools adds to everyday convenience and can increase long-term value. Also, proximity to friends and family might be a personal factor that affects your decision. You might want to balance the lifestyle you want now with the property’s investment potential over time.

These additional factors can influence your choice between location and size, so it’s worth keeping them in mind as you weigh your options.

Location vs size: what’s your next move?

Choosing between location and size isn’t easy, and there’s no one-size-fits-all answer. Both factors bring unique benefits and trade-offs, depending on your situation. Location often means convenience and potential value growth. Size offers more space and flexibility for the future. The right choice comes down to what matters most to you – whether it's lifestyle, family, or investment potential. And if you decide not to buy, that’s okay – renting a property is another viable option.

Take the time to consider your short-term needs against your long-term goals. Think about how each factor fits into your life now and where you see yourself in the future.

Happy home-hunting!