Apartments and units usually lag behind freestanding homes in demand and capital gains. The adage is that land is what appreciates, and the building is what depreciates, which has some truth to it. But maybe things are about to change. Units are back in focus with the housing shortage and density living becoming more attractive.
Regular readers may be aware that I have focused on helping clients who are downsizing. In my 25 years as a buyers agent here, I have helped many people into hinterland homes on an acreage. It is not rocket science to know that looking after a rural property requires a lot of energy and focus. Although this can bring much joy and satisfaction, it can become too much work as we age, so something with less maintenance looks more attractive.
Good Value
Apartment living is not only a good lifestyle choice but may also be a better investment option. Using Core Logic stats of Byron Bay 2481, let’s look at recent sales activity. From the 12 months to March 2024, the median house price for stand-alone houses has dropped 24.4%, from $3,100,000 to $2,342,000, according to Pricefinder/Core Logic. In the same period, the unit median price has risen from $2,300,000 to $1,281,250.
The prediction of ongoing price growth for units could also be quite substantial. This is mainly due to rising demand as the baby boomer demographic bump continues to move through the system. Couple this with the ongoing shortage of suitable stock to meet this trend. This is unfortunate as this recent ABC report outlines that the trend of fewer people living in family homes is one of the leading causes of the lack of housing. Elderly couples and singles moving into more suitable dwellings can be an asset in freeing up more housing ideal for young families.
Things to Consider
When buying an apartment, as opposed to a freestanding home, there are things to consider:
- When was it built? Older apartment blocks were once looked down on in the cities. These days, that’s not so much as people have begun to realise older-style apartments can often be bigger, better built, and cheaper, especially regarding strata fees. Older apartment blocks are not so common in the Northern Rivers but finding a quality older unit is still worthwhile and is possible.
- New units: Purchasing off-the-plan apartments and units is more common here but has its hurdles and complexity. I have experienced new units coming to market readily finding buyers as they come online. The problem is they are far from cheap and often don’t fit the downsizing budget. Land prices and the time and complexity of gaining DA approval add significant costs. Also, our three-story limit, which we all value and appreciate, makes delivering cheaper units difficult. A new unit development in Byron Bay is featured in Hot Property this month.
- Fees: Strata fees and body corporate governance are other problematic areas when buying a unit. This article I posted recently in a previous issue outlines some info about this. The NSW government recently introduced new regulations after the ongoing problems with building faults in high-rise towers.
- Check the vibe: Living next to difficult neighbours in a freestanding home can be unpleasant, but it can be much worse in an apartment when you have to share a wall with them. One of my due diligence steps when buying a unit for a client is ensuring no feuds or mental health issues inside a complex.
- Security: Unlike a house, apartments can have many more people coming and going, so ensuring a sufficient level of security can be key when you’re apartment hunting.
I hope these checkpoints are not too off-putting. The bottom line is that if you do your proper research or engage the services of an experienced Buyer’s Agent, purchasing a unit or apartment is becoming a better option in today’s market.