Does an apartment make a good investment?

With more than two-thirds of Australians living in a capital city and the demand for housing increasing, investing in apartments has become a popular choice for many.

Offering a more affordable entry point compared to houses, apartments can be seen as an attractive investment option for those looking to build their property portfolio. But is investing in an apartment really a good idea?

In October 2024, the Federal Government gave the green light to create the Housing Australia Future Fund and set aside $10 billion for it. This fund aims to provide steady money for social and affordable rental housing. Some investors might worry about how this fund could affect property values, especially in the apartment market. But with immigration staying high, surpassing 500,000 people by June 2023, there’s still a big need for housing. And a lot of these new immigrants might prefer living in apartments.

The pipeline of new apartments is thin

Lots of new houses are popping up everywhere, but it’s a different story for apartments. Since 2015, there have been about 26,040 apartments built every year in Australia’s big cities, but in the next three years, it looks like that number is going to drop by 39%. That means fewer apartments will be built compared to before. This drop is happening mostly in the biggest cities like Sydney, Melbourne, and Brisbane.

However, there’s some good news! In Perth and the Gold Coast, they’re actually going against this trend and still building more apartments.

What are the advantages of investing in an apartment?

In the past, investing in apartments wasn’t the norm. Many believed that real money in real estate came from owning land. The fast expansion of Australia’s capital cities has changed this perception, as land near city centres becomes more scarce and expensive.  Apartments have now become a more attractive and profitable investment option.

Affordability

Apartments are typically more affordable to purchase compared to houses, making them a popular choice for tenants looking for more affordable housing options. This high demand often leads to lower vacancy rates and higher rental yields.

Longevity

With more people opting for apartment living, you’re likely to have a pool of potential tenants. This means reliable rental income and a steady return on your investment.

Property Management

With apartment investing you will likely benefit from shared building repair costs, insurance and the potential to have less of a hands-on investment.

Broad buyer potential

When it comes to selling your apartment investment property, you will likely find you have a wide range of interested buyers. From first time buyers to downsizers as well as other investors. Having higher interest and competition in your property will likely result in a higher selling price.

Performance

Typically, higher rental yields, and capital growth strengthening with increasing demand.

Growth Drivers

Proximity to CBD, employment, transport, retail, restaurants. Quality of views and residents’ facilities.

Location

Within 10km of a highly built-up area, CBD or major employment hub.

Tenants

Professionals, students, young couples, downsizers and families.

How can you be confident you’re investing in the right apartment?

Not all apartments are created equal.

Many would-be investors are put off by the perceived risk of buying an apartment, but with the right knowledge and guidance, it can be a highly lucrative investment. At Ironfish, we understand that finding the right apartment requires a strategic approach. Factors such as location, growth drivers, and potential tenants all play a significant role in determining the success of your investment.

That’s why meticulously assess every property we recommend and work exclusively with top-tier developers.

More articles

Want to stay ahead of the rest?

Subscribe to our monthly newsletter: all the major property news, research, insights, strategies and investor stories in our monthly newsletter.

Contact us
All
Employment Enquiry
All
All
.docx,.rtf,.doc,.pdf fiel extensions are only allowed.
.docx,.rtf,.doc,.pdf fiel extensions are only allowed.