The Small Business Economy Driving Real Estate Forward
07-Nov-2015 12:00 AM
RESEARCH SHOWS SMALL BUSINESS CLUSTERS IMPROVE THE VALUE OF SURROUNDING HOMES IN AUSTRALIA
Sydney, Australia – 7 November, 2015: New research has shown almost half (47%) of Australians in the market for a new home are willing to pay a premium to purchase a property located near a local village or cluster of small businesses. This is according to the Economy of Shopping Small Report[i]– commissioned by American Express, which has uncovered the emotional and physical benefits Australian small businesses deliver to the community.
The latest findings show Australians looking to buy a home would invest – on average – an additional 4.4 per cent or $30,486[ii] for a home located near a local shopping village iii. This positive finding is derived from analysis confirming that each small business in close proximity to homes, delivers an average increase of $164 to the median house price, holding other factors constant iv.
“Many factors contribute to the price of the average home, but probably unknown to many, is exactly the extent small businesses play in boosting property prices. Despite auction clearance rates slowing and interest rates at record lows, if you compared house prices from a community with the average number of small businesses (375) with one which had twice this amount, the estimated median house price in the latter would be 10 per cent higher,” said Byron Rose, from real estate firm Rose and Jones.
American Express’ research report, The Economy of Shopping Small, reveals that the physical benefits delivered by Australia’s small businesses, extend far beyond house prices. Almost two thirds (62 per cent) of Australians agree small businesses improve the aesthetics of the surrounding area, 60 per cent say they boost the standard of living, and 58 per cent state they provide community support in the form of donations.
The notion that Australia’s small business owners do not solely measure themselves on financial success, is again evident with four-fifths of respondents judging business performance on the social and financial impact they have in the local community.
“It’s the human side of small businesses which sets them apart from their large counterparts, and it’s for this exact reason we need to fuel consumers’ passion for our country’s small business owners,” said, Melanie Cochrane, Senior Vice President American Express Global Merchant Services.
“Small business owners are willing to go above and beyond to meet our needs unlike any other business can and the benefits they deliver are far reaching. Whether it’s simply greeting us with a smile, or adding significant value to our house price, they are at the heart of our communities. Their success is ultimately our success, and it’s our responsibility to ensure they have the support they need to deliver it.
“The research highlights the benefits small businesses deliver to our communities that go beyond just the service they provide, by contributing to the community and home-owners back pocket. As consumers, it’s in our best interests to Shop Small, ensuring the future success of the communities we live in and the business owners responsible for shaping them,” added Ms. Cochrane.
Shop Small 2015
Shop Small is month long movement founded by American Express, which brings together support from the business community, all levels of government, ambassadors and consumers.
To encourage its own Card Members to shop in small businesses, throughout November American Express will provide a $10 statement credit to those who have registered their Cards in the Shop Small promotion. Card Members will receive the credit each time they spend $20 or more in participating businesses – up to 10 times.
To participate in Shop Small simply shop at your local business in November. You can also show your support at www.shopsmallaustralia.com
Notes to editors:
About Shop Small
Shop Small 2015 is a nationwide movement that brings together support from the business community, all levels of government and ambassadors including celebrity milliner Melissa Jackson and The Retail Doctor, Brian Walker. Shop Small begins on 1 November 2015 and runs for the entire month. Consumers and businesses should visit www.shopsmallaustralia.com for more information on the program and its benefits.
Shop Small is founded by American Express and is presented by Google and Optus and supported by the Accommodation Association of Australia, Australian Chamber of Commerce and Industry, the Australian Hotels Association, Restaurant and Catering Australia and Tourism Accommodation Australia. #ShopSmallAU
[i] The research: ‘The Economy of Shopping Small Report’ was conducted by AMR for American Express, polling 1,006 Australian consumers, 694 Australian small business owners and 40 small business owners who participated in a qualitative research in August / September, 2015.
[ii] This is based off additional field work conducted as part of the Economy of Shopping Small Research Report.
iii A local shopping village is defined as a cluster of small shops, cafes, coffee shops, small bars, boutique stores, nearby you.
iv The analysis took into account four variables, which together accounted for 39 per cent of variance in median house prices and were regarded as significant factors in determining as such. These were: distance from the CBD, Beachfront location, number of people per square kilometer; and number of businesses.
To download the Economy of Shopping Small Report please visit: www.Shopsmallaustralia.com/smallbusinessinsights2015part2
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Key data points: The Economy of Shopping Small Report
- The focus for this understanding was to look at house prices at the SA2 level in Significant Urban Areas, with a population of over 50,000 capturing 78% of the Australian population. The analysis took into account four variables, which together accounted for 39% of variance in median house prices and were regarded as significant factors in determining as such. These were:
- Distance from the CBD
- Beachfront location
- Number of people per square kilometre
- Number of small businesses
Together these findings were mapped against median house price data at the SA2 level.
- The positive finding for all concerned was that, holding all the other above factors constant, every small business in an SA2 is associated with an average increase of $164 to the median house price. To put this into context: if we take two non-beachfront SA2s, both situated an average distance from a CBD and with average population density, but one has the average number of small businesses (375) and the other has twice this number, the estimated median house price in the latter would be 10% higher than the former (an absolute increase of an estimated $61,400).
- While the data above tells one side of the story, consumers back-up this notion. A fifth of Australians would pay a premium to rent or purchase a home located near a local shopping village. This figure jumps to 47% among the 17% of Australians who are currently in the market for a new home.
- House hunting Australians who are willing to pay a premium are happy to invest – on average – an additional 4.4% or $30,486 to purchase a home located near a local shopping village.
- 68% agreed access to healthcare services was very important. 64% want specialised convenience stores such as a deli, butcher, fruit shop and fishmonger, along with other ‘like’ shops. There was a similar desire (59%) for amenities such as schools, libraries and newsagents.
- Lowest on the priority list was professional services firms – accountants and lawyers – along with the bottle shop! But not for men, 38% of males agreed it was a priority to live near a bottle shop, compared to females (31%).
- Women were also more likely to want to live near a deli or convenience store (69% vs. 59%); closer to schools and libraries (65% vs. 54%) and cafes (57% vs. 50%).
- When asked whether or not they felt their business boosts property prices in their local community, nearly a third (30%) believed they did.
- The report found 89% of small business owners agreed financial performance was the biggest indicator of physical value and success.
- However, 79% agreed their business success was also about positive economic and social impact on local communities.
- 73% of small businesses supported their community through charitable giving or sponsorship of local sports and ‘not for profits’.
- 71% agreed they provided a unique product or service to the local community, supporting the notion that small businesses in Australia are very innovative, while, 69% agreed they brought employment to local residents.
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 ABS definition of SA2s: general purpose medium-sized areas that represent communities that interact together socially and economically.
 This is based off the additional field work from a subgroup of those who would pay a premium to live near a shopping village. For more information, refer to the Methodology