If Your Budget About $200.000 To Spend
You can still buy something within 10 kilometres of Melbourne.
Generally, a budget of $200,000 can pick up an inner-city apartment with good growth potential.
Unrenovated one-bedroom apartments near public transport, and built from the 1960s through to the 1980s, often sell in Alphington, Ascot Vale, Brunswick West or Footscray for about $200,000. However, many flats are on main roads, which could pose a desirability problem if you decide to rent or sell the apartment later, possibly in an oversupplied market.
Angie Zigomanis, from research and forecasting group BIS Shrapnel, says values for land within 10kilometres of the CBD are the highest in Melbourne and expected to appreciate strongly over the medium to long term.
He warns buyers to avoid suburbs where development potential of apartments is great.
“Within the inner-city, this may mean suburbs where there are lots of industrial development sites and builders can add new stock very quickly,” he said. “Ashortage of supply against demand is what keeps values high.”
In the east and south, the typically strong suburbs of Hawthorn, Malvern, St Kilda and Armadale are recommended. Entry-level, one-bedroom apartments close to transport and shops start at about $250,000.
Buying an entry-level apartment with a view to renovating is often a good way to add equity – with its value rising by more than the sum of the renovation. But because of the relatively low initial cost of the property, buyers must be careful not to over-capitalise.
Tipping in the labour yourself (laying floorboards, painting), is the most common way to minimise the personal risk to your hip pocket.
Interest-free arrangements are available for kitchens, bathrooms and floors, should you want to spread the cost over several years, but be sure you can afford it.
Despite their often fantastic addresses, MrZigomanis warns first home buyers against some “studio” apartments.
Studios typically range in size from 20 to 40square metres and often have a combined living room and bedroom. Most one-bedroom apartments are greater than 45square metres and include defined bedroom and living zones.
Studio apartments are harder to finance (some banks can demand deposits of 20%) and they may be hard to sell because there are fewer likely buyers.
Should you plan to keep your property as the first in your investment portfolio, be warned studios are hard to rent. This is particularly true in an oversupplied market when tenants may find they can afford to live in bigger apartments.
Mr Zigomanis says in most cases, first home buyers would be better off saving the extra money needed to buy Melbourne one-bedroom apartment , which can be more than $200,000 in inner-city areas.
Source: RealEstateSource.com.au
