Six tips for first time investors looking to buy sky high: Steve Jovcevski

GUEST OBSERVATION

Based on the latest RBA data on new building approvals, the building of high density housing is almost level with detached housing having grown 36% in the past year alone. This trend is set to continue and investors should think about taking advantage of the upturn.

It’s no surprise there’s been such a trend towards apartment living based on high house prices and a change in our lifestyles, overall.

The change kicked off in 2009, post-GFC when people wanted the stability of property ownership as an investment and being an accessible price point, the demand for units has escalated ever since.

Since 2009, a lot of buyers, particularly first homebuyers have been priced out of the market, needing an average of $530,000 for the typical Australian quarter acre block, up from $458,400 just 5 years ago.

In Sydney, that number is even steeper, going from $544,000 in 2009 to $781,600 now. Whereas the average apartment price in Sydney is now considerably less at $600,000.

Price aside, the appeal of apartment living has increased in recent years with many apartments located close to the CBD or other employment hubs with close proximity to parks as well as the overall quality of the buildings which has improved.

Councils must now comply to certain standards when it comes to new builds e.g. better privacy, more green space, certain hours of sunlight, etc. and buyers and residents appreciate that.

Take the development at Harold Park just 5kms from the Sydney CBD with 200,000 squares of green space, 70% of apartments in its Eden buildings were sold off the plan in 2013, demonstrating just how popular apartment living has become.

The trend shows no sign of slowing down and suggests that buying apartments as an investment is a lot less riskier than it was 10 years ago.

The demand is increasing and if you’ve invested in a growing area with lots of green space and good transport links, you’re likely to reap the rewards in years to come.

Tips for any new investor:

• Go for buildings that are located near parklands and good transport links, preferably trains.
• If a block is on a main road, go for an apartment with a different aspect which is likely to cut down noise as well.
• Check the Strata Report for a full listing of the fees and rates you’ll be up for. Also, ask to see the minutes of the Strata committee meetings which will show up any major issues or structural damage.
• If buying in an old building, be aware that your maintenance costs could be higher as things need replacing / upgrading.
• A apartment in a smaller more boutique building will have more long term appeal than those in larger complexes
• Get a feel for the building and surrounds, is there a lot of noise, what are the amenities like, is it well maintained, etc.

Steve Jovcevski is property expert at Mozo.com.au.

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