Mistakes Buyers Make When Buying Apartments.
– Dime a dozen property. These are usually high rise (10+ floors) and have small floor plans with poor lighting. Vendors / property owners find it difficult to lease or sell this property for good prices due to high volumes of the same low-quality stock on the market place.
– Buying off the plan. There are many issues that can arise like project completion times, Sunset clause that offer developers ways out of your agreement and quality of finish. More information on this topic read: The Dos & Don’ts For Buying Off The Plan.
– Buying property with a Sunset clause: A sunset clause is a statement, typically used by developers selling apartments off the plan. What does the clause do? It puts a time limit on the contract’s validity. If settlement has not taken place by the end date included in the clause, both parties are legally entitled to walk away from the contract. In such a scenario, the buyer would receive their deposit back in full.
– Buying property with fire cladding issues: The 2018 Victorian Cladding Taskforce identified 354 low/moderate-risk buildings and 275 high/extreme-risk buildings
The VCT found dangerous materials are widely used on buildings throughout Victoria, this highlighted the fire safety risks arising from the non-compliant use of exterior cladding.
More info on the cladding audit update.
– Location, location, location. Many apartments are appearing in the outer suburbs away from important local amenities and infrastructure. To avoid buying into a money pit, it’s wise to follow simple rules like; distance to the city (maximum 8km from Melbourne’s CBD), walking distance to a train station, coffee shops, schools, shopping centres, parks, beach or walking tracks.
Even buying property in the CBD, a one bedroom apartment can vary by hundreds of thousands of dollars depending on which street you buy in.
– Cost of up keep: Many apartments in Melbourne have large body corporate fees and existing structural issues that can cause a price crash in the property value. It’s important to do your homework before buying any property. Did you know some apartment buildings in Melbourne charge body corporate fees upwards of $15,000.00 per annum? This doesn’t include the cost of council rates, water rates and insurances.
How To Play The Apartment Market To Your Advantage In 2024
Looking at Melbourne’s big brother property market Sydney, an entry-level 2 bed, 1 bath, 1 car apartment sells for approximately $1M. This is almost double Melbourne’s entry-level apartment price.
Why is it so expensive? Sydney is a world class city that migrants and businesses flock to. The price of inner-city land is unaffordable to the middle class where buying apartments are still in reach.
Melbourne is showing signs of not being far behind Sydney when it comes to popularity. Melbourne experienced the highest migration and employment rates in Australia, and the apartment market is eyed as affordable in comparison to Sydney.
In Melbourne, apartments are relatively cheap to purchase, cost effective to live in, low maintenance, located close to great amenities and infrastructure, and most importantly close to high paying job opportunities.
To ensure your property ownership journey is successful, you have to make the right moves pre-purchase. Having a good team to ‘steer your ship’ by influencing your decision-making saves you time, money and headache.
This means finance advisors, finance broker, buyer’s agents, property managers and solicitors. Each has an important role to play in your assets long-term success.
How do you spot a good ‘quality’ apartment?
Our buyer’s agents have been buying property for over 20 years. We understand the key factors that affect capital growth and apply this when selecting an apartment. Some selection criteria we apply:
- Minimum size apartment.
- A healthy balance of apartments and residential property.
- Lower number of apartments in the complex.
- Around infrastructure (trains).
- Secure car park on property title, not leased.
- Life style options (cafes, shops, parks, beach etc).
- Low maintenance and holding fees.
- High rental return, 4% p.a.
- Certain proximity to the city.
- Checked and approved by the fire safety board.
- Read the minutes of meetings to make sure there are no major repairs be conducted.