Now is the time to invest in inner city property according to a property according. Since late last year there has been an influx of people purchasing property off the plan in inner city areas. This trend has emerged particularly among first-home buyers, who now seek apartments the city, rather than a house in the suburbs.
Statistics show that Sydney and Melbourne’s populations are growing: however, inner city construction is slowing. Hence, prices for these properties will continue to grow.
There are several reasons first homeowners are moving to the inner city. To begin with, first homeowner grants (FHOG) have recently changed in NSW and Victoria. Now grants are only available to first time buyers purchasing new properties – an attempt by the state governments to drive construction. This forces first home buyers into a choice between living in the outer suburbs or the inner city in order to benefit from the FHOG.
However, the primary driver of the change can be attributed to a fundamental cultural shift in attitude among 20 and 30 something first home buyers. While it was once the dream to start a family in the suburbs with a large backyard accompanied by a long commute into the city, we are now witnessing this trend in reverse.
Convenience is now favoured over space, as the new generation of first home owners prefer to be close to work, education, shopping, cafes and restaurants. Also, living in a city apartment means no maintenance, no lawns or gardens and the ability to lock up and go on holidays at any time.
The younger generation who make up the majority of the first homebuyers are the ‘the new and now generation’. Primarily made up of young professionals, they want the best table now, they want a new car now, they point at a designer product and they want it new and now.
The cost disparity between buying an apartment compared with a house also makes buying an inner city apartment an attractive prospect. Studies also show that there are higher incomes in inner city areas. Also, by living close enough to work or study they save on transport costs.
What does this mean for investors? Investment in building inner city apartment blocks will obviously reap profit in this current climate. However, this is an exceptionally expense, and out of most investors reach.
Buying an inner city apartment and renting it out is a more viable option for most. While rental yields have slowed in Sydney, they have continued to grow in the rest of Australia. The lack of development sites in the cities means there is a cap on how many properties can be built in the next ten years. As such, it would be wise to invest now while the apartments are affordable.
Living the inner city life is now the dream for a lot of young successful professionals. This is driving change, bringing people back closer to the city, into modern designer new apartments.
They say "leave the sea or green change for the oldies" – this is the concrete change and investors should take note.
Sam Elbanna, CPM Realty
Sam Elbanna is the founder and managing director of CPM Realty and is regarded in the industry as one of Sydney’s leading project marketers.
With 18 years of experience in property development around Sydney, he has a keen understanding of property markets, developments and investing in Sydney. He has been instrumental in the sales of a number of development sites ranging from small suburban residential development sites in the suburbs, to larger multi-storey office buildings and development sites in and around the Sydney central business district.