State governments are rezoning loads of areas in an effort to boost development and create more housing. Which means that all home buyers need to understand what difference zoning can make to property value.

If you are buying a house to live in, you're best to buy one in a low density residential zone. Houses that are located adjacent to medium or high density zones are not as attractive to the owner occupier market. That means staying away from major transport hubs and arterial roads.

But some people want to speculate and buy a house in a medium or high density zone, hoping that one day in the future a developer will pay them a huge amount of money for it.

In these zones, more dwellings can be built on the block (as opposed to just one house), which, in turn, results in an uplift in value. The really big gains can sometimes come when you join up with your neighbours to create a much larger development site.

Now, this is a risky strategy and we’re not saying it won’t work, but the biggest capital gain usually comes to people who owned the property before the land was rezoned.

And if you buy a house in one of these zones and the block of land is too small to develop, or for some reason not attractive to developers, then you'll be sitting on a very poor asset indeed.

So you can see that sometimes zoning will increase the value, but not always.

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