VIC What influences Apartment price/sqm, apart from location?

Hi Everyone,

I am looking to do further research into what buyers think are important features in an apartment, like-for-like. This can also extend to NSW and QLD properties, although I won't be able to say a great deal about the market there.

Apartments Price Per Square Metre Update Q1 2017 Secret Agent.

Ok, so we know the expensive suburbs, no surprise, are East Melbourne, South Yarra, etc., which are generally reflective of house prices; the average suburbs, probably the CBD; and the cheaper ones located further West and North.

If we use the CBD as an example, we can see a great deal of variation although the average price per sqm is about $8.4k (2017 prices, could be the same about now). What influences a buyer to pay more, like for like, in a 2 BR unit with no carpark? Apart from the obvious view factor...

Why have these apartments, not off the plan, sold for 9.5 to 10k/sqm:
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-132744694
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-131407746

While these sold for significantly under the average, around the same time? (7k?)
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-130599942
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-132078302

Is it down to:

• Age of the building (is older or newer better)?
• Type of residents
• Exterior appearance of the building
• Density of the building
• Body corp fees (afaik, it doesn't seem to make the slightest difference)
• Unique features (Period? Very tall skyscraper?)
• Amenities e.g. pool, sauna, common room, bar, 24 hour concierge...

Any ideas?

 

Isn't this like asking what determines the length of a string, apart from [one factor that goes towards string length]?

 

So you don’t think there are other factors? How do you account for the price discrepancy in my examples?

 

Your examples are chalk and cheese

The more expensive building has
- better design. People will pay more for a more functional layout (storage, separate laundry (even if tiny), more natural light, access to a bigger balcony, better ventilation
- different type of building. I would say looking at the ceiling heights this is an older possible heritage like building
- more central location


When you compare merely on a square metre rate you don't take into account layout/design/orientation/ammenities/uniqueness of building. If you had a 100sqm apartment with no windows with an 80sqm apartment with plenty of natural light and ventilation then it's an unfair comparison

 

supply and demand perhaps?

is there anyway to compare number of listings at any point of reported sale?

 

Huh? I meant that there's probably a nearly infinite amount of factors that go into a per sqm value, on top of the location.

I don't use per sqm calculations to try and determine value at all, apart from as a very broad yardstick to begin with. That's not how property is valued, so its not that useful a statistic.

If you're using it as a primary measure, then I'm not surprised you get inconsistent results!

 

Thanks, these are the answers I’m looking for.
I realise it’s a bit of a captain obvious question but I would like to get a broad set of responses on the features that buyers generally prefer. Some are not so clear cut.

For example, many amenities vs no amenities. I’ve been consistently told that no amenities and low BC fees are desirable, and that’s indeed what I’ve bought. But some relatively new resale high rises with the lot are also fetching good prices.

Is a two level split a turn off? You’re getting less land value technically and have to put up with stairs.

Are people willing to pay more for heritage? Or close to new, with a bit of time for defects to surface?

And is no balcony a deal breaker in a low rise?

etc etc...

I’d just like to point out that the cheap-ish Exhibition street example is smack bang on Bourke St next to Chinatown, parliament and Myer. Also a spacious boxy layout.

 

Is there a value allocated to the sinking fund? Quality of maintenance & presentation?
Stewardship of the OC?
Neighbours/occupants?

 

No, it is supply and demand. If everyone LIKE to live in your suburb's apartments for SOME reasons, while not yet in the next suburbs' just a street away, you will see the price will be much more different.

SOME reasons will be anything you are describing, and some time, they are as unbelievable and diversified as our human cultures can be

 

Definitely all things to consider. The glaring differences I can see is that the first two are in more low rise boutique blocks and in the more low supply premium ends of the city (being the leafy collins street and eastern end of the cbd) where I dare say less student type bunk bed apartments exis.

The first of the latter two is in the 'paramount' building which contains self serviced apartments and is quite dated (it looks to be build ontop of a small mall - so not sure if you would even own a portion of the land under it). It is not lavish by any means and unlikely to attract long term owner occupiers or tenants.

The other building on little lonsdale I am quite familiar with as my mate rented there a while ago. It is not a pleasing sight from street level being mainly concrete in color and quite narrow. Seems to appeal more to students than owner occupiers.

Another point is that the first two may command untapped future potential with airrights/redevelopment etc. whereas the latter two look to not have that potential.

In saying all that, little lonsdale one based on purchase price may end up being the one that yields the best overall (if you can find a tenant now that is).

But if strictly talking about capital gains, you won't get it if someone isn't willing to buy it off you for more than you paid for it and its usually the owner occupiers/developers that are crazy enough to buy at ANY price! In saying that investors are also willing to buy a lump of gold for thousands for dollars, why? who knows but you sure can't live in it and it yields nothing!