For investors trying to break into the property market, apartments are an affordable and highly sought after investment option because apartments can be picked up for a cheaper price-point than freestanding homes: just look at the CoreLogic data for November 2016, which puts the median property price in Brisbane at $568,000 for houses and $398,000 for units.
Being a more affordable option is just one of the many benefits of investing in medium to high-density properties. Here are a handful of other bonafide reasons why it might pay off to invest in apartments over houses in the current market.
Designed for changing demographics
The way in which we live in Australia is changing. Around 30 years ago, 19% of all households comprised of single occupants. By 2011, this had grown to more than 24% of all homes – and by 2036, the number of one-person households is projected to increase by between 61% and 65%. Translation: apartments currently appeal to more people than ever before, and this trend is set to continue.
Broad rental appeal
While houses hold appeal with families, apartments appeal to a much broader rental population that includes everyone from young professionals and established white collar workers to students, couples, singles, international expats… and the list goes on. This helps to minimise vacancy periods and ensures strong, ongoing demand for your apartment investment year-round.
Massive depreciation benefits
Depreciation is a legal tax deduction that gives you the ability to write-off the wear and tear of your investment property, on items such as carpets, cupboards, hotplates and ceiling fans. In apartments, you also get the added benefit of depreciating shared or communal items, like pool filters and elevators. These additional deductions can add a pretty penny to your bottom line.
Less expensive to maintain
One of the main benefits of apartments and units is the fact that they are low maintenance. Why spend your afternoon cleaning the pool or weeding the garden, when the body corporate takes care of that for you? There are also entire sections of the home – such as the roof structure – that fall under the responsibility of the body corporate, so as a owner, you would only ever be liable to pay for a portion of roof leak repairs. This could save you considerable money over the life of your investment.
As with any investment, it is essential to research current market conditions in the specific suburb you’re interested in, before you part ways with your investment dollars. In many neighbourhoods apartments are the ideal investment choice, as they offer convenience, access to amenities and a comfortable lifestyle.
For investors, the key to success is research. Do your due diligence and get to know the specific drivers of growth within the local real estate market, and you’ll be well on your way to enjoying prosperity from your property portfolio.