I IMAGINED my first property would be a spacious apartment overlooking a park, like those swanky New York lofts in the movies.
Of course, the harsh reality of buying in most capital cities crushed that illusion. But if I couldn’t get the view, could I at least get something I liked?
I soon found an old two-bedroom unit on Sydney’s north shore for $325,000, securing me a modest space with half a kitchen and pink tiles in the bathroom. Yes, it was in one of those unstylish red-brick blocks from the sixties, out of date and under appreciated. But it worked.
Ten years on, I still think older units are ideal for first-time buyers. Sure, gaze up at the new high-rises and wonder what might be. In a second-hand block, however, you might just get two bedrooms at a lower price tag.
SUBURBS OR CBD?
With all the new units going up across our major cities, you might be forgiven for neglecting the Beatles-era two-bedders. But many of those old buildings are still there, tucked away in the suburbs or in pockets of the inner-city.
A number of these blocks have the advantage of being close to transport lines and shopping centres, too, says director of buyers’ agency Hotspotting.com.au, Terry Ryder.
As an example he suggests Sunshine, which is just 11km west of the Melbourne CBD, where relatively affordable properties are attracting a lot of buyers on a budget.
“The infrastructure there is very good and it’s actually a major transport hub for both trains and buses,” Mr Ryder says. “There are also a couple of university campuses and a major hospital. It’s a lot more affordable than property at a similar distance in other directions of the CBD.”
Consider that a two-bedroom unit in Sunshine has a median price of $335,000, while units the same distance south of the CBD, say in Malvern East, have a median of $589,500, according to Realestate.com.au. Malvern East just so happens to have a number of new luxury-style blocks as well, many with units selling for well above that median.
Ryder also suggests Logan City, which is in the southern part of the Brisbane metro area. In the suburb of Woodridge, for example, you can buy an older two-bedroom apartment for under $200,000, just over 20 kilometres from the Brisbane CBD.
“In Logan City, the cheaper suburbs are actually older ones along the spine that’s formed by the Pacific Motorway,” Mr Ryder says. “The train line runs alongside the motorway as well and that’s where retailers and other services are. The new units tend to be located quite a long way away from that infrastructure.”
Meanwhile in Sydney, you’ll likely need to go 15 kilometres from the CBD toward Bankstown and Belmore in the southwest for a two-bedroom unit below $500,000. And if you’re willing to look a little further away in say, Blacktown, older units there are actually close to $400,000. Both are well below the $708,000 asking price for units across the city, as per SQM Research.
BIGGER ISN’T ALWAYS BETTER
Remember that phrase about big things in small packages? It also applies to apartments. Don’t let lower prices on smaller unit blocks fool you into thinking you’re buying a lemon. Some of the older apartments actually have good potential for financial gain down the road.
Chief executive of Your Empire Property, Chris Gray, says that while new properties can be an attractive purchase, you’ll often pay a premium for them. It can be a better strategy to purchase a slightly older property in a smaller block and value add through renovation, he says.
“Inexperienced buyers can find it difficult to look past some of the less attractive aspects of second-hand properties and see how they can be transformed,” Mr Gray says.
“A fresh coat of paint and recarpeting can cost as little as $5,000 and add around $10-20k to a property’s overall value if done well. Units in smaller blocks tend to have lower strata fees than bigger blocks, too.”
Whichever way you go, Mr Gray says it’s always best to buy well, not simply cheaply.
“Regardless of whether you purchase a new or second hand property, you should always focus on buying properties that tick all the boxes,” he says.
Mr Ryder says older blocks can also have individual character — like the art deco finishes you often see in six and 12-unit blocks — and this uniqueness is very valuable.
“High-rise buildings are a dime a dozen,” he says. “They all look the same and you can’t distinguish one from the other. Research has shown that apartments in smaller boutique blocks actually have better capital growth than apartments in big modern high-rises.”
