The first time investor property selection criteria: Cameron T. Clarke

GUEST OBSERVATION

2015 has kicked off with an abundance of off the plan apartment enquiry on Apartment Register, across Melbourne’s inner city suburbs.

Apartment Register’s 400 enquiry sample has been 90% local owner-occupier, comprised of first home buyer (FHB) and first time off the plan buyers; the remaining 10% is local and overseas investors who typically own more than one property.

The common theme is the preference to purchase in the inner ring suburbs considered to be within 10 kilometres of Melbourne CBD: close to their place of work, friendships groups and public transport. For the most part, the buying experience is overwhelming, navigating through pricing, floor plans and marketing material with the average purchaser enquiring between five and 15 projects over a three to six month search timeline.

The trend for owner-occupier enquiry is the desire to live in what they phrase as a ‘boutique development’, considered to be that of less than 80 apartments with the ideal preferred number at 50 apartments. Owner-occupiers prefer lower annual body corporate fees, as they have existing recreation memberships and wish to settle within a six to 18 month settlement time line from date of enquiry, with an 18 month settlement period the maximum amount of time prepared to wait, prior to moving in.

Single first home buyer enquiry is 70% female (age bracket of 25-35) and 30% male (age bracket of 28-40) with a budget of $400-$450,000 for a one bedroom, one bathroom with car park (preferred over car stacking systems) at a minimum size of 45 square metres. 50% of the first home buyers currently reside at their parent’s residence and have assistance from the parents, with the remaining currently renting with a partner or friend and have saved the 10% deposit without family assistance.

First home buyer couples in the 28-34 age bracket have a product preference for two bedroom, one and a half bathrooms with car park configuration in the $500-$700,000 price bracket. Selection criteria includes natural light to bedrooms, ample ventilation and security system.

First time local investors selection criteria is for two bedroom, two bathroom and car park due to rental yield and flexibility to rent to a couple or friends. The proximity to transport and the number of the apartments within the developments mimics that if they were buying to live in.

The enquiry for over 55 year old downsizers is a healthy demand for two bedroom and study, two bathroom and car park at a minimum size of 80 square metres, with a budget of $700,000 to $900,000. The attraction is the cost of apartment entry, comparable to a townhouse product with lower entry cost and lack of stairs. Half of the enquiry of over 55 year olds still have a child living on premise, which does not deter their timing to sell the family home and downsize within the next 12-24 months.

At a suburb level, the trend in our enquiry data indicates buyers look for suburb corridors and are prepared to choose between three to four suburbs within that corridor area. For example, first preference for many is Fitzroy and Carlton, which depending on available products, clients are prepared to extend their criteria to North Melbourne or Collingwood.

On a suburb level, South Melbourne is the number one requested suburb - with Fishermans Bend gathering momentum with potential buyers - communicating that a complete suburb is not required for venturing beyond for schools, amenities and other services.

First time overseas investors prefer the Melbourne CBD as an investment, or for potential future use by the family when studying in Melbourne for tertiary education. Experienced overseas investors prefer the North Melbourne and Carlton precinct for proximity to Melbourne University and the Southbank precinct apartments for the Crown Entertainment Complex, along with access to the Botanical Gardens and Arts Precinct. Our enquiry indicates the even trend for one bed, one bathroom products up to $500,000 and two bed, two bathroom products up to $650,000.

Cameron T. Clarke is founder and principal of myrealestatemate.

This article first appeared on Urban Melbourne.