For many, many years I have been totally anti-apartments.  All I did was take a look at the amazing opportunities in buying houses – often for a much lower price – and I wouldn’t even give apartments a moment of my time.

Apart from the major point that you have total control over a house, what really turned me off was the strata fees . . you never can tell how crazy these fees will become over time and if you have a hopeless strata manager, your apartment (or town house) will be a financial mess.

But – times change 

Jump to 2023 and we’re facing a mix of forces that justifies a re-think of the apartment option.  Yes . . this comes with qualifiers but first let’s consider the factors impacting this type of property. 

  • The housing shortage – I will restrain myself from throwing blame (for now) but the fact is we don’t have enough property for the current population.
  • Growing population – Even though we don’t have enough properties for our current population, the Federal Government has increased the permanent migration intake for the next few years, largely to address the employment crisis.  Permanent migration allocations will be bumped to 190,000 – this reflects a mix of individuals (142,000) and the balance for partners and children.  However with students and other groups it is expected we will see over 400,000 new migrants arriving in 2023 – where will they all find accommodation?
  • Changing demographics – The Howard / Costello baby boost group is now reaching an age of moving out of home.
  • Future population – Currently there’s 26,400,000 million of us (as at 21 April 2023) and the ABS is projecting we’ll hit 30,000,000 by 2033 – roughly an increase of 4,000,000 between now and 2033.  That’s 400,000 per year. 
  • Dwelling supply – We’re currently roughly undersupplied by 200,000 properties today though no one seems to really know how undersupplied we are  . . [why do we not have a handle on this?? Has no one in governmnet heard of satellite technology??].  We typically build between 150,000 to 200,000 dwellings per year, and the Fed Government has ‘committed’ to ‘ensuring’ we build 200,000 per year [you know – the “we’ll build 1 million in five years” statement made in the new (2022) Federal Budget announcement].  However building commencements have fallen to critically low levels and as of 21 April 23 we’ll be lucky if we build 100,000 by year end 2023.  BUT . .we’re forecast to grow by 400,000 ppl per year  . . ummm . . . does anyone else see a problem with this??  Am I the only one who is looking at supply this way? 

Anyway . . . we’re basically going to need a lot more property than we have available.  So, while you will definitely have more opportunities when buying a house – as long as it’s the best one for you – the reality is we’re going to have to consider apartments and new builds in the future.  As a strategy, buying apartments has an upside as well as a downside.

On the upside = More variety than you realise

To ensure our clients buy successfully, we’re always looking for property that will (1) match their specific requirements and (2) provide as much opportunity and flexibility as possible. When we’re looking for apartments for clients we always assess each apartment on all the critical success factors, including future potential.  We have built up an extensive number of ways to really amplify performance.

If you’re considering an apartment purchase, there’s more variety and range of strategies you can use than just the basics.  Consider the following for starters.

  • Buy and renovate – though you will usually need approval from strata prior to taking action.
  • Use the Airbnb play – though restrictions on this include limiting the amount of time properties can be offered to the Airbnb market.
  • Buy a block (or even just two units) under torrens title, then strata title and sell separately.
  • Buy into an older block and develop with the other owners – in our major cities older unit blocks can be knocked down and replaced with multi storey high rise blocks.
  • Hold for capital growth.
  • Hold for cash flow.

The other benefit of apartments is land tax issues will usually be a long way into the future, and the buy-in price is currently fairly good [though this won’t last long given the supply issues outlined above].  Also – while I hate the control restrictions of strata – the upside is your strata fees should cover most maintenance of the common areas.

On the downside – Restrictions abound

Well let’s be honest . . there’s quite a long list on the downside.  Sharing the property with sometimes questionable tenants of other units, lack of control over improvements, exposure to poor strata management, a limited strategy range when compared to houses . . to name just a few. 

However, as long as you make good choices, the upside of apartments is starting to strengthen.  So how do you make good choices?  Unit block by unit block will have it’s pros and cons depending on the suburb and block location, but generally if you’re buying into strata (and this could be an apartment, town house or duplex) at least start by considering the three critical documents of the Strata Report, Building and Pest Inspection, Strata Meeting Minutes.

If you want to be sure you’re buying the absolute best option for your budget, let us do all the work for you.  Email me if you would like to book in for a strategy session that is guaranteed to save you time and make the most of your current position.

About the author

Debra Beck-Mewing is the Editor of the Property Portfolio Magazine and CEO of The Property Frontline.  She has more than 20 years’ experience in buying property Australia-wide and has extensive experience in helping buyers use a range of strategies including renovating, granny flats, sub-division and development. Debra is a skilled property strategist, and a master in identifying tailored opportunities, homes and sourcing properties that have multiple uses.  She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. As a passionate advocate for increasing transparency in the property and wealth industries, Debra is a popular speaker on these topics.  She is also an author, podcast host, and participates on numerous committees including the Property Owners’ Association.

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Disclaimer – This information is of a general nature only and does not constitute professional advice.  We strongly recommend you seek your own professional advice in relation to your particular circumstances.