If you’re wondering how you’re ever going to afford to get your foot in the door of Australia’s red hot property market, it might be time to consider apartment living.
Housing affordability has continued to worsen in Australia, with first home buyers now needing around 4.5 years to save enough to buy a house. But time isn’t the only factor; if you’re looking to buy a median priced house, According to Bankwest’s First Time home Buyers Report, you’ll also need to save approximately $85,800 over those 4.5 years.
To break it down for you, that’s around $20,000 a year, which is equivalent to around 5,700 coffees. “A 25 year old hoping to buy a home will be almost 30 when they actually achieve that goal,” says Vittoria Shortt, Bankwest’s Retail Chief Executive. “It now takes longer to save for a house than it does to complete some university degrees.”
If your budget is already stretched and you don’t happen to drink 15 coffees a day, buying an apartment could help you get into the property market sooner.
According to Bankwest’s report, to save a conservative 20% deposit for a unit, you’ll only need to pinch your pennies for four years, raising an estimated $76,900. And you’ll get out of that rental property around 10 months earlier.
When it comes to affordable property even the researchers agree; apartments are they way to go. “Across Australia’s capital cities the median unit price is currently recorded at $410,000, which is $82,000 more affordable than the median house price,” says Cameron Kusher, research analyst at RP Data.
While there are far fewer units nationally compared to houses, in most instances, units are much more affordable and allow buyers the opportunity to live in a location where the house price might be out of reach. However, if you plan to buy an apartment, there are some things to watch out for.
1. Location, location, location
As with all property, the location of your apartment is important. Buying closer to the CBD, and buying at the top end of the market where there is limited supply results in the best return on investment. Lower-end apartments located outside of the CBD are the worst performers, especially those with little architectural or lifestyle advantages.
If you’re buying an apartment as an owner, it’s important to take your own lifestyle into account. If you’re the private type that likes a big backyard, living in close quarters may not be the right move for you. On the other hand, apartments offer a number of lifestyle advantages for both owners and renters, such as resort-style facilities, a high level of security, low maintenance requirements and are, quite often, close to restaurants, shopping centres and public transport.
3. State of the market
The decision to buy an apartment should also take prevailing market conditions into account. There are a number of factors that influence supply and demand of apartments, so to ensure you get the best return on your investment, consider the local population. Demographic changes such as an ageing population, or a lot of young families in the area, may affect your investment. Construction can also affect your purchase, especially if there are lots of new apartments flooding the market.
The key, as with buying any property, is to do your research. Visit council and local developer websites, read property reports, find out all you can about the local demographic and gain a solid understanding of median apartment prices and price movements in the area where you are buying to ensure you make a solid decision.
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