Is Buying an Apartment a Good Investment?

In October 2023, the Federal Government introduced the $10 billion Housing Australia Future Fund. This Fund’s primary goal is to address the community’s housing needs. With immigration projected to remain high (over 500,000 people in the financial year to 30 June 2023), the demand for living spaces, including apartments, is expected to stay robust.

New Supply Provides More Choice

In the coming years, we can expect the construction of newly built apartments in the middle rings of capital cities, particularly near transport hubs and in some outer suburbs. These new developments, striving to keep up with population growth, could significantly impact rental yields and capital growth. The average time from planning to settlement in a 200-unit building is seven years, and if population growth continues at its current rate, apartments will remain a sound investment, especially if the price gap between detached houses and apartments narrows.

Whether it’s a small apartment suited to students or young professionals in urban areas or larger family-oriented builds in the suburbs further from the CBD, the new apartment supply in the coming years will offer a wide range of options for investors.

Social and Affordable Housing Isn’t Traditional Investor Stock

It’s important to note that many new apartments built under the Housing Australia Future Fund won’t be traditional investor stock. This housing stock will likely be institutionally owned. In areas where new developments are expected, investors looking for apartments in locations that will see significant population growth could find opportunities.

Apartments Can Be a Good Entry into the Property Investment Market

If you’re new to property investing or are looking to expand your portfolio, an apartment can be an excellent way to enter the market without having to wait to purchase a house. Generally, apartments have a lower price point than detached homes, making them an appealing option, particularly for rental yields in the current market. This affordability and the potential for consistent income make apartments a solid choice for those considering property investment.

An apartment is a solid investment, particularly in a tight housing market. It can provide consistent income and serve as an asset to grow your broader financial wealth or as a nest egg if you sell it before retirement. In buildings where the owner’s corporation maintains the property well, you can expect to attract quality tenants who appreciate the convenience of apartment living.

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Please keep in mind that this post is not intended to provide financial or legal advice. Before making any decisions for yourself, please speak with your expert financial and legal advisor

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