The Australian property market is constantly changing, and the last two years have been a real rollercoaster. Now, with covid-related restrictions largely eased and borders open again, it seems it is time for units to shine.
According to the latest Housing Market Indicators Report published by PropTrack, demand for units is now outstripping demand for houses. During March, enquiries for units were a staggering 16.6% higher than the previous year. That is the highest it’s been since the onset of the pandemic in March 2020.
With COVID-normal underway, we are seeing people return to our major cities and more international arrivals. Increasing interest rates and the spiraling cost of living has people seeking out more affordable options. People are also reconsidering what lifestyle factors are important to them, especially those that lived through tough lockdowns during the height of the pandemic.
Return to the office
During the pandemic, the demand for units in capital cities decreased sharply as people flocked to the outer suburbs and regions looking for space and an alternative lifestyle. Now, with offices reopening and in-person learning resuming at schools and universities, people are returning from the regions and looking for affordable accommodation. This has prompted increased demand for units from investors and owner-occupiers.
Return of international arrivals
With the international borders open again, temporary workers, migrants and international students are returning to our shores. As a result, the demand for rentals has skyrocketed. Inner-city vacancy rates are at a 16-year low, making inner-city apartments a hot target for investors.
Affordability
With interest rates tipped to keep increasing for at least another year, it’s no surprise people are looking for more affordable property options. The gap between house and unit prices increased during the pandemic as people sought out the space offered by free-standing houses on large blocks.
We are also seeing record-low vacancy rates, making inner-city units and apartments very attractive investments.
But it is not just investors. First home owners, downsizers and owner-occupiers are all seeking to balance lifestyle preferences with affordability. In addition, people are choosing to compromise on space to maintain the inner-city lifestyle.
Location & Lifestyle
Location and lifestyle are important factors in buying a property. For many buyers, location and lifestyle are more important than the type of building they live in. Inner-city living means they can make savings in other areas – particularly transport. A car-free lifestyle and minimal commuting are high on the list for many young adults looking to buy their first home.
People are also realising the benefits of not bearing the responsibility of performing maintenance on their property. In a body corporate or strata community, maintenance tasks for shared areas are usually outsourced and covered under management fees. So instead of spending their weekends in the garden or cleaning gutters, they can reclaim that time to do something they enjoy.
Those who lived through tough lockdowns during the COVID pandemic are looking for a sense of community, having experienced feelings of isolation. Living in an apartment or unit brings with it an instant community. Your neighbours are never far away, which can be very reassuring for people living on their own.
The future of units
The demand for units in both the rent and buy markets is expected to continue growing throughout the next year, and possibly beyond. Eventually, this is likely to narrow the gap between house and unit prices, especially in inner-city areas.
If you’re a first home buyer trying to get into the market, a unit may be the perfect stepping stone. Not only are units more affordable, but they’re usually easier to maintain so you can concentrate on building your career and exploring the delights of your local city.