Single person households are the fastest growing demographic in Australia and with blocks of flats going up all over the country, is the great Aussie dream now a fab apartment?
In the last two years, almost one in every two properties built in this country are now apartments. Where once we were a nation of detached homes with enough room for the kids and a dog, are we now moving towards high-density living? Will houses on big blocks soon be a thing of the past?
For some buying a flat can be a more affordable first home. With house prices rising particularly in cities such as Sydney and Melbourne, for many buying an apartment can be a more affordable way to enter the property market. Since the GFC building approval rates for units and apartments have been on an upward trajectory.
“In the last two years, almost one in every two properties built in this country is now an apartment,” says Propertyology’s Simon Pressley.
While not a fan of apartments as an investment, financial adviser and investment expert Bruce Brammall says higher density living can offer a great lifestyle to a lot more people.
“As any big city expands, in order to live closer to town you’ve got to build up. It allows a lot of people to live just a small distance from the city,” he says.
Many are also struggling to buy their first home and can be left renting for years longer than anticipated. Apartments can offer these renters an affordable inner-city lifestyle while they save for a bigger deposit.
Baby boomers looking to downsize are partly behind the increasing popularity of apartment living with many drawn to the low-maintenance lifestyle a great flat can offer.
“Many (boomers) get to a place where they have a big garden which is a big chore and maybe their health may not allow them to maintain it,” Brammall says.
Living in a flat allows baby boomers who sell the family home easy access to transport, great cafes, family and friends in a great property that better suits their needs.
But cashed up baby boomers aren’t the only demographic keen on that inner city life, with rentvestors also taking to apartment living.
With many unable to afford a home in suburbs where they would like to live, some younger people are buying investment properties in outer city areas that are then rented out, while they rent in those popular inner-city areas.
“It is something that has become more popular in recent years. People want to live in the inner city, but can’t afford to so they buy in outer areas. It gives them a foothold in the property market,” says Brammall.
With old buildings being converted into apartments and many new high-rise flats being built, is there enough demand to meet increased supply?
But is an apartment still a great investment or are some parts of the country in danger of being oversaturated?
In December 2015 building approval rates for new units fell by 8.3% according to the Australian Bureau of Statistics, after years of record highs. Prosper Australia statistics released late last year showed that 4.8% of Melbourne’s housing stock was empty with investors either unable or unwilling to rent out their properties.
Brammall says that while many may love the lifestyle high-density living can offer, it doesn’t necessarily represent a great investment. “For investors they want rental yields and flats can have high rental yields but it’s generally not something I recommend to clients,” he says.
“It (buying a flat) can be a great lifestyle choice. But I see buying a home and buying an investment as two different things,” he says.