Amid all the talk about the oversupply of apartments, particularly in Melbourne and Brisbane, potential buyers really need to do their homework before purchasing an apartment.<\/strong><\/p>\n Buyers\u2019 advocate Cate Bakos<\/span>\u00a0spoke to us about which units typically retain the greatest value and what design features or amenities buyers should look out for.<\/p>\n The Reserve Bank of Australia and the\u00a0Australian Prudential Regulatory Authority have both expressed concerns over the number of new apartment buildings in both Melbourne and Brisbane, says Bakos.<\/span><\/p>\n \u201cWe\u2019ve got an oversupply of new and off-the-plan, if we had a stronger blend of established properties (in those areas), regulators may not be quite as concerned.\u00a0But regulators are worried about off-the-plan for a few reasons. Obviously having a longer range settlement means that the buyer is taking a risk, so the risk is if the market contracts or the market changes they may have a valuation shortfall. <\/span><\/p>\n \u201cAlso, lenders<\/a> may find that they are exposed to a high number of apartments in a certain building or a certain area \u2013 so there\u2019s a concern there, they don\u2019t want to be exposed to or vulnerable to specific pockets\u00a0or segments of the market. <\/span>Also, some of those new apartments in both cities have particularly small floor plans, it\u2019s counter to what the majority of the market wants and it\u2019s counter to what the banks want,\u201d she says.<\/p>\n Bakos says buyers need to be aware of how big the pool of potential buyers for an apartment is as this will have an impact when it comes time to sell.<\/p>\n \u201cBuyers should understand the risks with new apartments and they should be very, very cautious about buying anything that a mainstream lender won\u2019t be excited about financing<\/a>,\u201d she says.<\/p>\n Buyers can also check with the local council to see what plans developers may have submitted for yet to be built nearby apartment complexes as a way of assessing the relative scarcity the unit which is important, Bakos says.<\/p>\n \u201cIt\u2019s a great idea to see what\u2019s been approved and what could be rolling out, but it\u2019s no guarantee that the project will go ahead,\u201d she says.<\/p>\n \u201cThe scarcity component is what has been threatened of late with apartments because there are many of them and all the newish ones are quite similar.\u201d<\/p>\n Art Deco units often retain value as they are larger and are often located in smaller boutique complexes. Picture: realestate.com.au\/sold<\/p>\n<\/div>\n Size and design do matter when it comes to purchasing an apartment, says Bakos, who warns that properties with less than 50sqm of internal space are likely to face financing issues as lenders will consider these units to be too risky.<\/p>\n \u201cThere\u2019s two things that physically help an apartment retain value. First is if there is a boutique number in the block, that is the relative land component that each owner owns is greater than if it\u2019s a high-density tall building.<\/p>\n \u201cSecondly, architectural style and era plays a huge part, people obviously love Art Deco or New York-style loft apartments. So there are styles which hold value and outperform the apartment market,\u201d she says.<\/p>\n Renovating an apartment can be complex, you will need to have a structural engineer assess the property and you may also require the permission of the body corporate. Picture: Getty<\/p>\n<\/div>\n Older apartments are often larger yet outdated, but Bakos warns owners\u00a0do face unique challenges when renovating such as getting permission from the\u00a0owner\u2019s corporation or strata corporation<\/span>.<\/p>\n \u201cThe permission to renovate is really vital \u2026 it might involve getting a structural engineer on site. For any significant internal resurface with the walls being moved, this absolutely needs to be scoped out before someone\u00a0sees if they can do it,\u201d she says.<\/p>\n Apartment buyers should look at the property\u2019s title, zoning and outgoings before they sign on the dotted line as certain lenders can be wary of things like the title type, says Bakos.<\/p>\n \u201cIf your property really does seem too good to be true, you really do need to get some legal advice about the contract, as it will be evident in the contract if it\u2019s a varied title type,\u201d she says.<\/p>\n Apartments built on land that isn\u2019t zoned as purely residential\u00a0is also considered risky by some lenders and buyers should look into the building\u2019s outgoings \u2013 that is the\u00a0owner\u2019s corporation or strata fees \u2013 which can vary\u00a0greatly.<\/p>\n
\n <\/p><\/div>\n [ad_2]Why are regulators worried about new apartments?<\/h2>\n
Should buyers avoid all new apartments?<\/h2>\n
How would a buyer\u00a0assess a unit\u2019s relative scarcity?<\/h2>\n
Do certain architectural styles retain greater value?<\/h2>\n
![\"12\/135](\"https:\/\/i0.wp.com\/www.realestate.com.au\/blog\/wp-content\/uploads\/2017\/05\/25115428\/ArtDeco_Travancore_a.jpg?resize=800%2C600&ssl=1\")
<\/p>\nIs it easy to renovate and add value to an apartment?<\/h2>\n
![\"building](\"https:\/\/i0.wp.com\/www.realestate.com.au\/blog\/wp-content\/uploads\/2017\/01\/27120648\/Plans-thumb-1024x768.jpg?resize=1024%2C768&ssl=1\")
<\/p>\nWhat are the main risk factors buyers need to consider?<\/h2>\n
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Realestate.com.au <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"