The rise of apartments
In LJ Hooker’s latest White Paper, National Research Manager Mathew Tiller outlined the increasing popularity of apartment living in Australia.
Between 1980 and 1990, unit purchases accounted for around 19% of residential purchases nationwide. But between 2000-2010, the figure rose to 29% of property purchases.
While figures post 2010 are unavailable, the rise of cranes across the skylines of Australia’s capital cities displays the continued popularity of apartment living.
Investors have played a large role in the changing ratio of house to apartment sales. Strong interest and enquiry from domestic and offshore investors has driven demand for new and off-the-plan apartments during the past 12 to 18 months. This has been chiefly driven by record low interest rates. The record low interest rate environment has seen returns for other investment assets, like term deposits, remain low compared to the combined capital growth and rental return of residential property. This has seen investors re-adjust their portfolio with a higher mandate for direct property.
Downsizers – predominantly Baby Boomers – have also played a significant role in the increase in apartment sales. Apartments require less maintenance than a three or four bedroom house, and are typically close to amenities such as shops, medical facilities and often public transport routes. Of late, Baby Boomers have also taken advantage of property price growth to sell their family home, buy an apartment, and place the surplus funds into their retirement schemes.