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While owner-occupiers and investors alike rush to snap up houses, one expert believes apartments are still worth a consideration, especially for yield-hungry investors.
Quality, well-located apartments continue to offer strong yields and excellent returns, Raine & Horne’s national manager for property management, Maria Milillo, said.
For instance, in Sydney’s , the gross rental yield for apartments stood at 3.1 per cent in May, above the 2.5 per cent recorded for houses, CoreLogic data has shown.
Moreover, data from CoreLogic’s recent rental review for the March 2021 quarter suggested that excellent returns largely depend on the property’s location.
Namely, despite the craze for houses, regional units recorded a rental growth of 4.8 per cent in the first three months of the year, while capital city units added 2 per cent.
But aside from the strong returns, apartments also offer more affordable entry points into the investment market.
“The lower outlay can also mean fewer risks and more investment choice,” Ms Milillo said.
For example, the median house price in Crows Nest is over $2.2 million, while the median for apartments is only $860,000.
In Unley, an apartment costs an average $565,000, while houses could reach up to $1.1 million.
Apartment investors can further cut costs by sharing insurance and upkeep expenses with other unit owners, according to Ms Milillo.
“Paying annual fees levies such as body corporate fees may also make your investment property more straightforward to manage,” she noted.
Looking ahead, the property manager anticipates the demand for apartments will soar as renters return to the cities.
“If this situation eventuates and international students also begin to return to Australia as travel bubbles evolve, demand for rental apartments closer to universities in the capital cities will start to rebound.
“Investment yields will improve in the first instance,” Ms Milillo concluded.