News Blog - Residential

01 February 2017

WHAT HAPPENED TO THE ONE BEDROOM APARTMENT?

The fate of the one bedroom apartment in 2016 was an interesting one. As councils and the government continue to push the ‘affordability trolley’ around and demand that there are plenty of smaller, cheaper apartments in any new development, we saw the market go in the other direction for off the plan property.

To understand why we need to look at a number of factors as well as direct market feedback experienced by our sales team. Rewind to September 2015; the Australian Prudential Regulation Authority (APRA) clamped down on investor lending. The major banks changed their Lend to Value Ratio (LVR) meaning any investors now needed larger deposits to get loans (20% as opposed to the usual 10%) as well as reduced the number of investor loans they could write each month.

These two swift actions essentially put property investment out of reach for those who wanted to buy their first investment property or potentially add to their portfolio. These rules were relaxed in 2016 without the fanfare of the clamp downs however by then the mentality was that it couldn’t be done when in fact it could.

The owner-occupier market also experience a perfect storm of sorts. Buyers essentially stretched themselves to get into the two bedroom market due to a number of factors. Primarily, money was cheap in 2016 and continued to be throughout the year which led people to be bold and borrow maximum amounts with a view to work down the lump sum as quickly as possible at a low fixed rate. We also continued to see assistance given to these buyers from family members, namely parents chipping in so their children could essentially skip a rung on the property ladder and go straight into a larger 2 bedroom apartment rather than use the one bedroom apartment as a stepping stone.

This is not to say the one bedroom market died out. These factors meant demand was lower than it had been in a number of years which led to a slower than historically average rate of sale.

Whilst 2017 is merely weeks old it is quite interesting to note that we have experienced a significant rise in enquiry regarding one bedroom apartments from both investors as well as owner occupiers. Their feedback; a more conservative approach in 2017 noting that they believe the days of 10 per cent capital growth per annum are gone for now and interest rates will inevitably rise.

Date: 01 February 2017 Author: Rohan Aalders
Residential
Rohan-Aalders-admin

About the author:

Rohan Aalders

With over 13 years experience in the Property Industry, Rohan joins TGC with a fantastic range of professional experience from project acquisitions, feasibility studies to sales and marketing. Rohan has a genuine interest and talent in providing the highest service and expertise, ensuring all clients expectations are not only met but exceeded.

Your details:

Your friend's details:

RETURN TO LISTING You will be returned to your current within seconds
SEND THIS ARTICLE TO A FRIEND
SUBSCRIBE FOR THE LATEST NEWS