REVEALED: What type of apartment you should invest in next

Perth Now

25-05-2025

Inner-city apartments are finally being endorsed as a hot buy by a major property investment group, as some apartments sell below replacement value.
Investment forecaster Hotspotting claims the inner city apartment market is one of WA's five hot markets, based on rising sales activity, along with the city of Stirling, the Belmont and Albany local government areas and the Shire of Mundaring.
Hotspotting general manager Tim Graham said city apartments were generally selling below their true value, and below the construction cost required to replace them.
Analysis by The Sunday Times shows some city apartments have this year sold below the price they got more than 15 years ago.
Mr Graham said while the Greater Perth market was beginning to slow after a strong three-year run, the inner-city apartment sector was a bright spot, especially for investors seeking affordability and long-term potential.
'The days of 20 per cent annual house price growth in Perth are behind us, but that doesn't mean the opportunities have dried up,' Mr Graham said.
'Right now, the smart money is moving into Perth's affordable and high-yielding unit markets and into regional centres like Albany, where infrastructure and lifestyle appeal are driving impressive growth.'
Inner Perth apartment start in the $200,000s, with one bedroom abode commonly selling in the $300,000s and $400,000s, making it one of the few CBDs of Australia's capitals with accessible price points for inner-city living.
Mr Graham said the city's residential appeal was growing, partly because of major projects under the $1.75 billion City Deal, including the Edith Cowan University campus, the WACA ground upgrades, and concert hall redevelopment.
Mr Graham said past prices were not necessarily a good indication of price growth ahead, especially when there had been several changes, including growing acceptance of apartment living.
'Our analysis is suggesting that now is when we believe the timing to purchase is ripe,' he said.
Analysis by The Sunday Times highlights the price drop for some city apartments, including one 120sqm, two-bedroom, two-bathroom apartment on St Georges Terrace which sold for $820,000 in 2009.
It sold again in March this year for $740,000, which represents a $80,000 drop in value over 16 years.
A separate two-bedroom apartment on St Georges Terrace sold in April for $735,000 this year, down $53,000 from the $788,00 price it sold for a decade ago in May 2015.
On Hay St, a two-bedroom apartment that sold for $1.02 million in 2012 has re-sold this year for $915,000.
Another example includes a one-bedroom apartment on Murray St that sold this year for $435,000, down from its last sale price of $500,000 in 2012.
In another Murray St complex, a two-bedroom apartment sold in March this year for $400,000, down from $480,000 in 2013.
But investor fortune differs wildly, with some city complexes increasing in value, with some even doubling in price in the last few years.
'As a buyer, I wouldn't have any concern at all in buying something that is cheaper today than it was historically — or even from brand new — I'd see that as me buying at good value, providing I'm confident in the market direction,' Mr Graham said.
'And from our research, we see the demand for units in these locations rising due to the affordability factor as well as the lifestyle changes that we are noticing across the country whereby units are often the preferred living arrangement.
'There are so many cohorts of people opting for the lock-up and leave lifestyle that units offer, not to mention the safety, location, building amenities.'
WA property analyst Gavin Hegney said apartments were generally bought by investors for their rental yield, rather than capital growth.
He said that there was an art to choosing to right apartment, with buyers needing to consider whether views can be built out. They should also consider the structural standard of the building, and whether there was enough money set aside by the strata company for repairs.