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Small apartments may make great investments

1402107_smoke_cabin_indoorAustralia is living its dream of being the land of the largest properties but at the same time it is doing equally well for a horde of small one-bedroom units. Michael Yardney for the Property Update writes how such properties are appealing to the 4 chief types of buyers:

  • People who are close to their retirement age and are willing to downsize
  • Young couples on a professional tightrope
  • Gen Y seeking to live independently
  • Middle aged men and women living singly.

Buyers are departing from the trend

On the other hand, such small properties are also enamouring owner-occupiers and investors who are looking to extract maximum out of tenancy. Much like the other major countries around the world, home seekers in Australia are departing from the conventional idea of big spacious homes with barbeques and patios. Families all across the spectrum are looking to embrace inner city high-density apartments that are conducive for career-moves. After all, such homes are pretty close to office spaces and are very well supported by transport, civic amenities and a café lifestyle.

The reason for the swing to small units

An exponentially increasing population and resultant shortage of homes have turned people close to the one-bedroom homes. As an aside, the soaring rental prices have also forced people to refigure their requirements. More and more of them are pondering whether they need that extra room.

With rampantly increasing requirement for the one-bedroom units, the owner-occupier and investors are going for a kill. They are willing to invest a lot more in such units to reap maximum dividends out of tenancy.

Advice for buyers

As a buyer, the piece of advice to follow is to keep away from Studio apartments. They are difficult to live in and are not the favourites with the banks either. Another kind to avoid is the pre-construction properties or the off-the-plan units. They may flatter to deceive as what is promised and what is finally offered turn out to be two different things most of the times. You can read the full article here.

An eye on the Opportunity Cost

I think that Yardney has got most of his ideas right. I feel that the owner-occupied homes will get a boost in the arm for the First Home Buyers due to the latest run of grants. This would make the FHBs even better equipped to make greater profits on tenancy. The inner city apartments will however have to do something quickly about the median prices or else buyers may start looking at the aspect of Opportunity Cost and seek purchases elsewhere.

Will sale of inner-city small apartments suffer from high median prices?