Effects of large supplies of apartments on existing stock

In Melbourne apartments are being built, many in towers. It seems that a lot of these are on the small side. I have an IP apartment in Kew, about 8 kilometres from the CBD, block of 14, two bedroom, 90+ square metres of floor, OSP, close to everything useful. Are the new apartments competing for my tenants or buyers, and if so, to what extent?

 

Hi matchstick what's the reason for such preference for apartment living in Brissie. Is it thw perception that land house is expensive, cultural preference by certain groups or it has much higher yield? I personally only want house on land.

 

@matchstick thanks for that offer. I may just take you up on that in the future.

For the location discussed here (7-8k to city), I think the largest demographic is young professionals and students. The area is close to the university and train is 12 mins to the city. Land is very expensive there and unless you have 1m+ you won't be getting land around there.

 

Hi Larry, I personally don't buy apartments - I only go for inner-city townhouses with a great location. I have been blown away at how readily and receptive the market has been to 3 bedroom apartments being sold at close to 700k.

The recent renovated Indooroopilly Shopping Centre is a major draw and the level of building activity around the area is remarkable.

From my own observations from walking the ground, a lot of these apartments are being purchased by young professionals either as homes or investments. I think the younger demographic would emphasise more on convenience and lifestyle as opposed to land banking.

Indooroopilly is one of a handful of suburbs that are popular with young professionals and students. Particularly because it is very close to the University of Queensland and is well serviced by transport options and the massive shopping centre. Toowong is another suburb that is developing rapidly and shares the similar demographic profile. It is even closer to the city, well serviced by transport options (even has a ferry) and the shopping centre has also recently undergone a major facelift.

Everyone's circumstance is different but I would think that a large majority of those who purchase the new apartments instead of crappy houses with land is predominantly because of lifestyle choices or for tax benefits (better yield & depreciation benefits).

 

Plenty of Cranes and apartments going up in Perth hopefully some over supply soon and some become cheap.

Wouldnt mind a good yield. Im thinking 2017 is when we will see this effect occur when most are completed.

 

I agree completely re: Perth.

Buying opportunities in 2017-18 looking ore likely at this stage. It'll be a good time to source well located stocK that offers prospects.

That is, of course, if Perth can find a way to re-invent itself, Madonna-style lol

 

@Jerome I am in the exact same situation. I have an 80’s 2 bedder in Rokeby Terrace, Taringa.


I am going to hold onto it for the following reasons:


1) The new stock will be selling for at least $550k for 2 bedders (I bought mine for 400k Dec 2014)

2) Lots of people don’t want to live in massive new high rises with lifts, pools etc. My unit is in tree lined street and in 3 story walk up building.

3) Its CF neutral so holding costs are nothing (even if rents drop $10-20 p/wk. it won’t affect my life to any significance)

4) Desirable inner west area

5) Hopefully all these new developments brings further gentrification to the area?

6) My strategy for this property is buy & hold

7) The fundamentals of a good investment are there (large unit, close to shops, transport & cbd of major capital city)

8) Sydney (south) has zillions of new apartment buildings & yet the older ones in the area have still seen significant growth.

9) I’m an optimist

 

Haha don't buy apartments to invest in in Melb or Bris. My folks hold one unfortunately - terrible investment. Cheap way to secure your own home though, but then again it's even cheaper to rent it.

 

@B-Mac

It sounds like you're in a better situation than I was. While my location could not be beaten, it was a 6 story building with 15 owners and a lift. This means it had very high body corp. My holding costs never reached neutral, and without significant capital growth, it was basically a dud investment.

I also don't like the macro economic situation going on within Aus and the world at large. I'd rather have no debt for the next few years until the economy stabilises somewhat.

Your situation appears to be better and I wish you the best with that