Significant price increase in Erskineville apartments: HTW
Throughout the inner west suburbs of Alexandria and Erskineville, investors have always made up a high percentage of property owners due to the relatively close proximity to the CBD, the recent Herron Todd White review revealed.
The report however suggested that over the past two years investor activity has dramatically increased due to the construction of several new high density unit developments, particularly in Erskineville.
"A large industrial section at the southern end of Erskineville has seen the most construction and suddenly there has been an increase in supply and investors have flocked to the area.
"The price point of these units, at approximately $600,000 for a 1-bedroom unit and $850,000 for a 2-bedroom unit, appears to be at about the right level for investors in these areas."
The report added that many of these unit were purchased off the plan up to two years ago and at the time, a 1-bedroom unit would achieve around $550 per week rent and a 2-bedroom unit around $750 per week.
"This would have seemed like a fair yield at the time but we are now seeing these same units sell for significantly more due to the extremely strong growth in the market.
"The consequence of this has been decreased investor interest in re-sales of these units due to a now very low yield.
"Local agents have recently stated that as investors try to increase the rental price there has been decreased demand, pushing vacancy rates up in the areas for the first time in years.
"This has the potential to lead to decreased investor demand throughout Erskineville and surrounding suburbs with more newly constructed stock to come onto the market."
