Popularity of Apartment Living Helps Unit Prices Stay Strong
Sydney property investors are increasingly looking to units over detached houses for continued growth and strong rental yields.
The May 2012 results of the RP Data-Rismark Home Value Index* showed that Sydney house values fell by 4.8% over the previous 12 months compared to a 0.8% increase in the value of units.
This goes against the commonly held traditional belief that houses appreciate in value at a higher rate than units due to the underlying land value. This has not been the case in recent years. In Sydney, unit values have outperformed houses over the past five years, growing by 4.3% for units compared to 2.6% for houses. (rpdata.com)
Equally, from another investment perspective, rental yields are also typically stronger for units than they are for houses. In Sydney the gross rental yield on a house is only 4.4% compared with the gross rental yield on an apartment of 4.9%.
So what is behind this strong and continual demand for apartment living? Well for one, units are usually more affordable than houses, with the median house price in Sydney $148,000 more than the median unit price. For first home buyers, it is often difficult to get a foot into the property market, so units and townhouses are becoming more attractive than ever before. New developments are simply not coming on to the market quick enough to satisfy this demand.
Also, with the 2011 Census showing that 26.7% of dwellings in Sydney are apartments, there is growing acceptance that apartments are a viable alternative.
Statistics show that many Australian’s no longer expect or want to raise their family in a detached suburban house with a large back yard. In 2001, 83% of couples with children lived in stand-alone houses; 10 years later, the census shows that only 78% choose this type of residence. The proportion of families living in semi-detached or terrace houses, flats, units or apartments has risen, from 17% to 22% over the same period.
It’s no wonder apartment living is being embraced by more and more Sydney-siders, even those with young children. Units are often strategically located close to workplaces, transport infrastructure, shops and schools, making busy family life much more workable. And with more apartment developments incorporating roof gardens, oversized balconies and community gardens in their planning, there are more places than ever for apartment residents to stretch their legs.
* Property Observer 21/6/2012 by Cameron Kusher
*SMH Domain 18/7/2012 Catherine Armitage