Apartments stand out as an affordable choice when it comes to cracking the property market, not to mention downsizing. But a looming shortage may soon push unit values higher.
For many of us, buying a house on its own block of land is the 'great Australian dream'.
While plenty of people achieve this goal, our property journey is often book-ended by apartment living.
For first home buyers, units can be an affordable choice, costing around 30% less than houses according to CoreLogic.
Then, as we head into our senior years, an apartment offers secure, low-maintenance living, often with a wealth of amenities right on the doorstep.
Apartment demand is outstripping supply
Apartments may be affordable today, but a lack of new apartment construction, coupled with rising immigration levels, points to a looming apartment shortage according to CoreLogic.
And that could push values higher.
Over the next few years, new apartment construction is forecast to be 40% lower in the 2010s, leading to a shortfall of over 100,000 homes by 2027.
Close to 60% of the new home shortfall is expected to be in the apartment market.
On the demand side, CoreLogic says a stronger-than-expected level of migration into Australia has seen overall housing demand "skyrocket".
Historically, new migrants head to the high-density areas of our big cities, putting extra pressure on the unit market.
As CoreLogic explains, with interest rates potentially easing in 2024, greater demand and tight supply could fuel a "price boom" in the unit market.
Why more of us are choosing apartment living
Modern apartments are packed with the latest design and sustainability features, meaning they are no longer the poor relation of freestanding houses.
Across our major cities, apartments now account for 30% of all homes, up from 23% in 2010.
And the appeal doesn't just lie with affordability.
Today's apartments usually come with a wealth of benefits, including:
Government schemes: because apartments are generally cheaper than houses, they're more often under the price caps for a range of government schemes, including the Home Guarantee Scheme, stamp duty concessions, and first home owner grants (usually for new builds). These schemes can be combined to potentially save you tens of thousands of dollars and get you into the property market years sooner.
Sought-after locations: apartment living can be the difference between living close to work, or facing a long daily commute from the outer suburbs.
Lifestyle advantages: the days of apartments being cramped and lacklustre are over. A variety of on-site amenities, from barbecue areas to pools, gyms and car-wash bays, make unit living convenient and relaxing.
Low maintenance living: not interested in spending precious spare time mowing the lawns or cleaning the gutters? It turns out plenty of others aren't either. Unlike houses, units require minimal upkeep, letting residents enjoy more quality time.
Improved security: if you're after a lock-and-leave lifestyle, modern apartments fit the bill. Advanced security features add up to a safe and secure living environment.
Is now the time to take the leap?
Right now, apartments still present an affordable option for first-home buyers, downsizers and investors.
The median apartment price across our state capitals is currently $637,593 - but if CoreLogic is correct, that figure could soon increase as demand outstrips supply.
So if you'd like help exploring your options to purchase your first property - for example, with just a 5% deposit via the Home Guarantee Scheme - then get in touch today to discover your borrowing power.
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