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Apartments have traditionally been favoured by investors throughout Australia due to the fact that they are easier to maintain and renters tend to prefer this style of accommodation.
However, during the end of 2016 and early 2017 there have been growing concerns expressed about an oversupply of apartments in some inner city areas of Australia.
These concerns should not deter investors from buying an apartment providing they do the necessary research.
If you are planning to buy an apartment for investment purposes during 2017 then you should consider the following points:
1. Location, Location, Location will determine the long term capital growth of the apartment and rental returns. Carefully select the location before making a decision to buy. In the inner city area of most capital cities, for example, apartments that are within walking distance to the CBD and social amenities such as cafes and shops are always in high demand. It is also important to check if there many new apartment developments planned for the area as this could increase supply and reduce future capital growth potential.Investors should invest time researching before buying.
2. The quality of the complex and fit out of the apartment is also a key issue when making a final decision. Good quality apartments in a high quality complex will be easier to rent and also easier to re-sell. If the apartment development is poorly constructed, it may become tired within a few years and your apartment may prove less attractive to potential buyers. It is also important to check the exact internal floor space of the apartment. The price of the apartment should be measured in the cost per square metre and this will give you a good comparison compared to similar apartments in the same area.
3. Before purchasing an apartment, check the average weekly rent for a similar apartment in the same location. This will give you an indication of future rental returns. Also check how many new apartment complexes are planned for the area as this may boost supply and have an impact on future rental growth. It is also worth checking how many apartments in the complex are owner occupiers because owner occupiers tend to take a much more active interest in the upkeep of the complex. If more than 50% of the apartments are owned by owner occupiers then the complex should be well maintained.
4. Does the apartment have any special features that will enhance its resale value such as views? The views that the apartment can offer is important. If you are buying an apartment with good views, check that nothing in the future will interfere with these views i.e. the construction of a new building in front of your apartment. Also large balconies or courtyards can prove attractive to buyers when you decide to sell.
5. Parking is also very important when buying an apartment. Check that your apartment has a dedicated car bay and the ownership structure of car bays in the complex. The apartment complex should not be located off a busy road which might make inward and outward access difficult.