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Apartment market set to prosper as pandemic settles

Prior to the onset of COVID-19, the apartment market was in the midst of a four to five-year downturn, which made it difficult to sell apartments off-the-plan to ensure the start of projects.

The lack of projects and apartment sales led to an undersupply, which will become more prevalent this year as the market bounces back.

Mack Hall Real Estate Licensed Real Estate Agent Richard Self said there was very little supply on the immediate horizon.

“Apartment developments that were already completed had excess developer stock, and these apartments are now just about all sold, with buyers requiring new ready-to-go apartments,” he said.

“This, in turn, lifts the established market, as buyers have less options to choose from.”

ARENA Real Estate Partner and Sales Associate Brad Triplett said while values were still down from the peak years of apartment selling, the prices had rebounded an average of 10-15 per cent in the last year and a half.

“The good products are selling quickly, in most cases there is more than one contender to purchase them,” he said.

Borders opening and an increase in investors on the market has led to some predicting the apartment market will continue to prosper as the pandemic settles and the population grows.

“Cities around the country and the globe have experienced some hard times during the COVID-19 period,” Mr Triplett said.

“I believe once the COVID-19 situation here in Perth settles down, the revitalisation of Perth city will occur naturally and people will gravitate back to inner-city living, which they already are starting to do.

“With the rental market being extremely difficult for prospective tenants, we are seeing a surge in first homebuyers moving to purchasing apartments that fall within an affordable budget, which is seeing a demand increase in the apartment market.”

According to Mr Self, when there is an increase in the population there will likely be an increase in interest for apartments, from both a rental and sales perspective.

“Students, especially, will look to lease apartments around where they are studying,” he said.

“Families, workers and people returning to Perth from overseas will also usually look to rent or purchase an apartment to live in and move in right away.

“This allows them to get a feel of an area first, before committing to the ultimate family home.

“Apartments are appealing, as they are more affordable than a house or townhouse in the desired suburb that offers the lifestyle buyers are searching for.

“For example, the median price of a house in Claremont is $1.825 million, while an apartment that offers the same suburb amenity with a higher standard of living, modern kitchens and bathrooms is less than half that amount at about $680,000.

“Apartments also offer flexibility with some choosing to use them as a lock-up-and-leave for future travel, plus it is easy to rent out if they want to upgrade to a house later.”

Investors typically find apartments appealing due to the rentability of well-situated apartments.

“Investors want to ensure a consistent, steady occupancy rate, as it is ultimately providing an income,” Mr Triplett said. “Upkeep and maintenance is also minimal in comparison to owning a larger home, so this appeals too.”

As for the year ahead, Mr Triplett said, as long as supply remained lower than demand, we should continue to see improvement in the apartment market.

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