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How will Australia's apartment market perform in 2020?


The last 12 months have been a rollercoaster for property prices in Australia.


The record-low interest rate environment persists, with the RBA cutting the cash rate by a further 0.25% in its March meeting and the markets in Sydney and Melbourne are experiencing a strong recovery. With other uncertainties such as the coronavirus outbreak, it begs the question — how will Australia's apartment market fare in 2020?


We're taking a look at recent trends across the country to see how Australia's apartment market might perform for the remainder of the year.


Apartment living is here to stay

There's no doubt that apartment living is here to stay. According to Domain, one in 10 Australians live in an apartment, and the number of people who live in high-rise apartment buildings has more than quadrupled in recent years.


What do people look for in an apartment?

Whether you're a tenant looking for your next rental or a buyer, people want homes that are close to amenities. You need to make sure your property is close to shopping centres, schools, public transport options and lifestyle amenities such as restaurants and cafes. These factors are essential in attracting tenants, but it's also important when it comes time to sell your investment property.


Where should you invest in an apartment?

Some places are better than others when it comes to buying an apartment. While you want the property to be in a popular location, close to amenities, you also need to research apartment supply in the area, so you don't buy in a neighbourhood that's about to experience oversupply. This will hurt your capital growth and rental yield.


How are apartments performing around Australia?


One of the fastest-growing cities for apartments is Hobart.


According to Domain, apartment prices have grown by over 50 per cent in the last three years to a median price of $395,715. Apartments in Hobart typically rent for $460 per week, equating to a rental yield of 4.1 per cent.


Across New South Wales, the areas where apartment prices are expected to grow include Newcastle, Wollongong and Canberra.


Canberra is also another quiet achiever. As Australia's capital, there's an abundance of government employees and students who all need places to call home, which results in low vacancy rates. Since June 2018, the median unit price in Canberra has grown 1.9 per cent year-on-year to $448,737.


To summarise

Over the long-term, houses typically outperform apartments, but they're more expensive to buy. This makes apartments an excellent first investment property or step into the property market. As always, though, you need to do your research to make sure you're making a wise investment decision.


Please remember, this article doesn’t constitute legal or financial advice. Make sure you consult your accountant, financial adviser and other professionals before you make any big property decisions.



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