Property investing over the last decade has changed dramatically. The common idea that purchasing a property with land being the safest property investment is not as true as it used to be. Today’s markets are vastly different to those of a decade or two ago. The basis of the saying old saying ‘safe as houses’ stems from the fact that house prices depreciate, whilst land values appreciate. This is still true but overlooks booming trends such as apartment investing where there is plenty of value and money to be made.
The Value of Apartments
Although apartments themselves do not have a land value, the ground they are built on can have a massive impact on their value. Prime locations, regardless of property type will always drive value. Sydney is a great example where a one bedroom, one bathroom apartment averages a staggering $1 million! The changing demographics of our society in recent years have sparked a boom in apartment construction. Our society is trading in the traditional backyard for inner city living, chasing better jobs, better lifestyle and better commuting options. Current trends in Sydney and Melbourne markets will be followed by Brisbane and the Sunshine Coast in the near future. The potential to earn $1 million for a one bedroom apartment seems like a good idea to me!
Shift In The Economy
A long standing history of manufacturing, mining and job centres in rural areas has made house and land more attractive in the past. With the mining boom over, the primary industries driving the economy are rapidly changing. The rise in service based professions in online fields such as marketing, IT and education is increasing exponentially. These professions are primarily based in and around CBD’s on Australia’s east coast. These industries are set to become our primary industries in the near future which will translate to wage growth and job opportunity, making cities more attractive to live in. Areas of high economic growth, job availability, lifestyle and amenities will drive disproportionately high property values to their suburban counterparts.
What Properties Will Be In Demand In The Future?
These factors all point to one obvious conclusion. The need for inner city medium to high density apartments is inevitable. The Master Builders Association of Australia has already predicted that our need for new housing as a result of population growth in the next decade will exceed 9 million new houses. Historical market trends in areas like Sydney prove that the high values driven by demand is simply to good to overlook. Regardless of your preference, research and informed decisions on what properties are in demand currently and will continue to be in demand in the future is imperative to your investing success. CBD apartments should definitely be something to contemplate adding to your portfolio.