Should I purchase a one bedroom apartment?
The one bedroom apartment is becoming a growing part of the property market due to affordability factors and changing lifestyle preferences. They offer an entry point into the market and, more often than not, the convenience of being close to the city and public transport. But is a one bedroom apartment right for you?
As an investor
Based on data from the Australian Bureau of Statistics, demand for smaller dwellings is likely to grow based on an increase in single and two person households. The number of people living alone is projected to increase from 2.1 million in 2011 to between 3.3 and 3.4 million in 2036. The number of people living as a couple without children is projected to increase by a higher percentage, from 4.7 million to between 7.3 and 7.6 million.
Many people are out to rent for the lifestyle. They are prepared to make trade-offs (like size) to live in a premium location with the convenience of infrastructure (like public transport, shops and cafes) on their doorstep. A one bedroom apartment in a premium location thus has the potential to outperform a two bedroom apartment in a less desirable location.
Price and diversification are also factors an investor should consider. As a first time investor, a low entry point may be a more financial feasible option. As you build a portfolio, your preferred strategy may be four or five economical properties over one large property.
Related podcast: 2UE ‘My Property’ segment with CEO Ron Cross, July 15
As a home owner
If you’re looking to break into the property market, a one bedroom apartment is usually more attainable in terms of price. This is particularly true if you desire an inner city location.
If you’re concerned about the lack of space then ask yourself, do I really need a second bedroom? If you’re single, or a couple without children, chances are one bedroom to sleep in at night is probably sufficient. People have a tendency to buy more than they need. This results in spending more money and having a higher mortgage debt. Is the extra room worth it?
Related article: Housing wants vs housing needs via CoreLogic
Factors to consider
Whether purchasing a one bedroom apartment as an investor or owner occupier, you should consider the following:
Location
The ideal location is within 10 kilometres of a major CBD and within walking distance to local amenities such as shops, restaurants and public transport.
Amenities
Look for practical, sought afters inclusions like an internal laundry that will improve the everyday quality of living.
Layout
Ensure there is ample storage space and look for something with a balcony or courtyard to increase the overall square footage.
Views
Whilst not all views are made equal, avoid apartments that look into a wall or anything undesirable.