Apartments have long been a practical choice in the property market, offering affordability and the allure of downsizing. However, a looming shortage may soon drive up the value of these units.
Rising Appeal of Apartments
While the quintessential “great Aussie dream” is owning a house with a spacious backyard, many individuals find themselves embracing apartment living at different stages of their property journey. For first home owners, apartments represent an affordable option, typically costing approximately 30% less than standalone houses, according to CoreLogic. In later years, apartments offer secure, low-maintenance living, often accompanied by a wealth of amenities at one’s doorstep.
Increasing Demand, Diminishing Supply
While apartments are currently an economical choice, a potential shortage is on the horizon, driven by a lack of new apartment construction and increasing immigration levels, as noted by CoreLogic. This shortage could potentially drive up apartment values. Projections indicate that new apartment construction in the 2010s could plummet by 40%, leading to a shortfall of over 100,000 homes by 2027, with nearly 60% of this shortfall expected to affect the apartment market. CoreLogic points out that a surge in migration into Australia has historically concentrated new arrivals in high-density urban areas, further pressuring the unit market. If interest rates ease in 2024, the combination of heightened demand and limited supply could ignite a “price boom” in the apartment sector.
The Appeal of Modern Apartment Living
Modern apartments have shed the image of being less attractive than freestanding houses, thanks to contemporary design and sustainability features. Across major cities, apartments now constitute 30% of all homes, up from 23% in 2010. This shift in preference can be attributed to several factors beyond affordability:
Government Schemes: Apartments often fall below the price caps for various government schemes, including the Home Guarantee Scheme, stamp duty concessions, and first home buyer grants (typically for new builds). Leveraging these schemes can result in substantial savings and accelerate one’s entry into the property market.
Desirable Locations: Apartment living can provide the advantage of proximity to work, sparing residents from lengthy commutes from the outskirts of the city.
Lifestyle Benefits: Today’s apartments come equipped with a range of on-site amenities, from barbecue areas to pools, gyms, and car-wash bays, offering convenience and relaxation.
Low Maintenance: Unlike houses, units require minimal upkeep, allowing residents to enjoy more leisure time.
Enhanced Security: For those seeking a lock-and-leave lifestyle, modern apartments offer advanced security features that contribute to a safe and secure living environment.
Is It Time to Make the Move?
Currently, apartments remain an affordable choice for first home buyers, downsizers, and investors. The median apartment price in our state capitals currently stands at $637,593. However, according to CoreLogic’s predictions, this figure could soon rise as demand surpasses supply. If you’re interested in exploring your options for purchasing your first property, such as with just a 5% deposit through the Home Guarantee Scheme, don’t hesitate to reach out today on 1800-E-LOANS to discover your borrowing potential.
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