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Unit Market Primed for Opportunistic Investors

By Peter Gow

In the ever-evolving landscape of Australia’s real estate market, one thing is becoming crystal clear – medium to high-density units are taking center stage. In this article we will discuss many of the factors affecting the unit market and the opportunities that it may have to offer investors.

1. Growing reliance on units: 

We all know how limited land is, hence the high price we all pay to acquire it. As open land becomes scarcer, the medium to high-density sector becomes our urban knight in shining armour. It’s what’s helping accommodate our rapidly growing population.

2. Affordability and demand: 

Now, let’s talk about why capital city units are capturing the hearts and wallets of investors.

Affordability: With a median value of approximately $637,593, capital city units are your golden ticket. They make owning a slice of the cityscape a reality for many.

Robust demand: The demand for units isn’t just strong; it’s soaring. Picture this – a growing population, an affordability sweet spot, and the allure of urban living. That’s the magic formula driving the demand for these properties.

3. Shortfall in housing supply: 

“The National Housing Finance and Investment Corporation (NHFIC) predicts a housing deficit of approximately 175,000 units by 2027.” And guess what? A whopping 59% of that shortfall is expected to be right here in the unit market.

4. Declining approvals and completions:

The signs are clear, unit approvals for construction have been tapering off, with a -19.9% drop in July, a far cry from the decade average. Completions are also on a gentle decline, making up just 37.1% of new housing stock in early 2023.

5. Constraints on development:

Economic uncertainties, modest capital gains, construction costs, and a tight labour market have fostered a cautious approach in the world of unit development. But here’s where opportunity knocks. As fewer unit projects are expected to be completed, it paves the way for your investment to shine even brighter.

6. Demand from migration:

Urban migration is the name of the game. “Net overseas migration is expected to remain high through 2023 and 2024” according to Kaytlin Ezzy, Corelogic Economist. As cities beckon with opportunities, it’s no wonder that migration to urban hubs is on the rise. High-density markets in major cities are reaping the rewards of this trend, creating a rental market ripe with potential.

7. Impact on unit values:

Historically, units have been the smart choice for buyers, offering stable annual rent growth. But what’s truly exciting now is the potential for price growth in the unit market. As demand outstrips supply, a new era of opportunity is emerging.

All in all…with rising demand, a housing shortfall, and the potential for price growth, it’s a playground for property investors. Whether you own units or houses, keeping a keen eye on these trends could be your ticket to an exciting and prosperous future in the world of real estate.

If you feel you need any advice for your property investment journey or would like to receive an updated market appraisal please get in touch!

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