Despite some reports suggesting Australia is on the verge of an oversupply of apartments - especially in Melbourne, Brisbane and Perth – the truth is there are still good opportunities for apartment buyers, but only if they understand the market and think outside the inner-city block.
Buying an apartment has always been an attractive option to both first home buyers and investors.
Investors are feeling confident to expect relatively continuous rental income because many younger renters like the low-maintenance lifestyle apartment living provides. In fact, current vacancy rates for apartments in Melbourne and Sydney are less than two per cent – proving that the rental market is strong.
For first home buyers, an apartment can be a more affordable option for getting on the property ladder. While buying off the plan does come with its risks, there are also benefits such as possible stamp duty concessions. If the apartment block is already complete, buyers have access to a low maintenance property that is generally more affordable than its freestanding counterpart. There are also the perks of possible on site swimming pools, gyms, rooftop social areas and theatres common to many apartment buildings.
However, just like freestanding houses, not every apartment is the same and this is where apartment buyers need to be picky about what they buy. While there may be lots of cookie-cutter apartments in the metropolitan areas where multiple 50 story apartment blocks are common, these aren’t the only areas where apartment construction is underway. Buyers need to take more time to research the market and identify projects that stand out from the competing stock.
Looking to the suburbs, where smaller boutique blocks provide more creature comforts, transport links, family friendly neighbourhoods and larger, more workable living spaces – demand is still high. For example, an apartment building 16kms from Melbourne’s city centre, sold 85 per cent of its first stage to the tune of $140 million in just a day – only a few weeks ago. Another development even further out of the city banked $70 million in just an hour and a half.
Savvy buyers will know where every development is being built – that way they can make an informed decision. Some real estate websites like domain.com.au and realestate.com.au have tools to show where existing apartments, new builds and off-the-plan opportunities are, providing a general overview of construction across the city. Another useful tool is the free Liberty Property Report, which can be downloaded here. It provides the average value of all dwelling types in any Australian postcode, as well as data to help predict possible growth areas.
When it comes to financing the purchase, those in the market for an apartment should seek out a lender that offers competitive products with flexible criteria. The advantage of speaking with a Liberty Adviser is they have access to a wide range of products, in order to provide a solution that best matches the borrower’s needs.