To buy an apartment that will increase in value, take these 5 tips
For many first-home buyers, an apartment is the best way to get a foot in the door of the property market.
But with a huge variety of units on the market, it’s important for buyers to choose a property that will increase in value so they can take advantage of price growth when it comes time to upgrade.
The key to choosing an apartment that will deliver strong capital growth is to look at your purchase through the eyes of a future buyer, according to Canstar group executive of financial services Steve Mickenbecker.
“When you’re buying a house you should also be thinking about selling,” he said.
1. Bigger is better
“Thinking about the future value of an apartment, you’re looking at a two-bedroom, or even better a three-bedroom apartment,” he said.
Mr Mickenbecker said well-equipped apartments in this size range delivered strong results. “There’s always a market for well-located two-bedroom apartments near transport and with a car park,” he said. “It’s the bread and butter of the Australian apartment market.”
More affordable, small apartments have a narrower resale market. As a result, many lenders impose restrictions on small apartments, with buyers of properties under 45 square metres less likely to qualify for a loan.
2. Location and aspect
A property in the right spot can make all the difference, whether that’s the right suburb, road, view, or floor.
Apartment buyers should consider the suburb, the demographics of the area they’re buying in, and the target market for their property, according to buyers agent and founder of Property Mavens, Miriam Sandkuhler. “Certain suburbs and certain styles of apartments are in very high demand,” she said.
She said areas with both old and new high-end apartments that catered to downsizers were a good call, particularly suburbs with nearby lifestyle amenities to suit the demographic. Downsizers looking for lifestyle and quality may be prepared to pay a premium for apartments that tick all the boxes.
Mr Jovcevski recommended selecting an apartment with plenty of natural light, near transport, near a shopping centre, not on a main road and not under a flight path. “Real estate always goes back to the fundamentals,” he said.
3. Parking adds value
When buying in an area with a dearth of on street parking, choosing an apartment with parking is another way to maximise resale value.
In high-value inner-city locations, parking can add as much as $300,000 to the value of an apartment.
An REIV study found apartments with parking increased in value 4 per cent faster than those without, but that difference declined with apartments with more bedrooms.
4. Build quality counts
The quality of the construction can also affect whether a bank will lend money to purchase a property. According to Mr Jovcevski, alarms over poor quality construction and improper aluminium cladding are current key concerns, and badly built buildings could reduce a property’s value.
He said a good way to find out if build quality was an issue was to look at strata minutes to see if issues had been identified or works required.
Ms Sandkuhler said prospective buyers should engage professionals to ensure they weren’t buying a lemon.
“Any property can have $1000 to $50,000 worth of problems,” she said. “I always get properties inspected by building and pest inspectors to mitigate risk for my clients.”
5. Stand out from the crowd
Apartments with unique features that are difficult to replicate can differentiate a property from others on the market.
“Having a city view or harbour view can make a difference,” Mr Jovcevski said. Apartments with period features or buildings designed by well-known architects can also be winners.
Nature sells well, particularly in cities becoming more dominated by concrete and glass.
“People quite often prefer having a park nearby rather than a parking space,” Mr Jovcevski said.