The number of owner-occupiers in Sydney’s apartment market has risen to 42 percent. Many purchasers are reportedly Generation X and Y renters who don’t want to or can’t afford to buy a house in areas close to the city. Therefore, they are happy to upgrade to an apartment that they can buy.
The Australian Bureau of Statistics (ABS) suggest that some $45 billion was borrowed over 12-months to March 2014 to finance the purchase of residential property in New South Wales. This was 76 percent more than the level of credit taken-up in 2010-2011.
Most of the increase in borrowing has been associated with off-the-plan sales. In fact, high density building approvals in Sydney doubled with 20,534 dwellings being approved in the year to March 2014. This has resulted in apartment and unit prices increasing in Sydney due to demand.
Apartment popularity is not just popular with Generation X and Y though, say property experts. Empty nesters who are seeking to downsize and moving into dwellings that are easier to manage are also taking advantage of city apartments.
Property experts estimate that there will be strong demand for off-the-plan apartments over the next two years. This falls in line with the New South Wales first home buyer grant for new buildings, where first home buyers may be eligible for a grant of up to $15,000 if they by a new dwelling under $750,000 in value.
In addition, low interest rates and rising prices are expected to drive demand. It is anticipated that some 20,000 new dwellings will be approved per year in Sydney for the next five years. However, it is highly unlikely that this number of new dwellings will saturate the market as the global financial crisis curbed development and this is making up for the shortfall in construction.
The areas of Sydney that are most likely to attract new high density apartments are Paramatta (1,600), Ryde (1,200), Auburn (1,100) and Kur-ring-gai (900). So for those who are looking for good areas to invest in these could be viable options. Of course, before making any purchase, please do your own research and, if needed, seek out independent financial advice.
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