Inner city building boom will not automatically cancel out demand for existing properties: Ewan Morton

The property market is on the rise and so is the inner city building boom. As off-the-plan apartment sales attract investor attention what does that mean for existing property price potential?

It can mean everything and nothing.

By ‘everything’ I mean that the increase in brand new apartments coming onto the market could obviously potentially decrease the value of existing property in the area. It isn’t a great story to be telling as a real estate agent but it’s undeniable that many people will say "why buy an old one if there is a brand new one available?"

That’s the obvious and worst case scenario. It’s the concern I’ve encountered regularly when talking to investors whose property we manage in and around Pyrmont in particular. Should they get out now?

My response is that new apartments could also mean ‘nothing’ to the value of existing property.

It’s important to remember the apartment building boom is a reaction to carefully calculated and evaluated prospective growth in demand. That means demand for new apartments will not automatically cancel out demand for those already built.  Also, for existing properties in Pyrmont and the CBD significant value is invested in their prime location which will not decline.

It means there will be more choice but the anticipation is there will be more people looking.

My advice to landlords is to ensure their property is well maintained so it remains competitive in both in the rental and sales market.  It can be more cost-effective to undertake smaller, regular upgrades to keep fixtures and fittings top class and top quality.

I suppose what I am saying here is the shiny new play thing might capture a lot of attention but don’t underestimate the inherent value of elegance and sophistication; virtues that increase with age.