In his regular column in Switzer, John McGrath addresses the rise of apartment living
Here is his what he had to say:
Traditionally, house prices in Australia have outperformed apartments by a significant margin for long-term capital gain.
However, as we explained, the growth gap appears to be narrowing, reflecting the increasing social acceptance of apartment living as demographic trends shift.
According to RP Data, house prices in Sydney rose by 11.5% in 2015 with apartments trailing by just a touch at 11.3%.
Across the five prime capital cities (Sydney, Melbourne, Brisbane/Gold Coast, Adelaide and Perth), growth was exactly 8% for both property types.
Apartments are clearly an increasingly strong investment option with potential for great wealth creation.
They are no longer the poor cousin of houses when it comes to returns and part of the reason is that apartment living is becoming the preferred choice for a growing proportion of the population.
With close proximity to work and social activities and often with the convenience of onsite facilities such as gyms, pools and concierges, it is entirely possible that apartments are on their way to replacing the quarter acre block as the new Australian dream.
Our changing demographics are also driving this trend.
While the nuclear family is still dominant today, an increasing number of Australians live in a couple relationship without children or by themselves – and neither need or want to live in a house.
By around 2030, childless couples (DINKS and Empty-Nesters) will become the most common family type in Australia – and lone person households (SINKS and older people) will become the fastest growing household type, according to the ABS*.
Adding to this is increasing interest in apartments from investors due to affordability, as well as rising international demand.
Foreign Investment Review Board (FIRB) restrictions mean overseas investors can only purchase new stock – typically apartments.
Apartment living is on the rise around the world – literally. This report profiled the tallest residential towers both in Australia and overseas.
Many of them here at home are still in development with one of the highest, Australia 108 in Melbourne offering ‘cloud residences’ from Floor 71 up.
The tallest residential tower in Sydney, Greenland Centre on Bathurst Street, is also currently under construction.
In this battle for the city skyline, vertical villages are becoming neighbourhoods in themselves.
We can expect to see larger apartments for young families, offering a home within a 20 minute radius of everything they need, such as schools, shops, jobs and transport.
Tallest residential towers – Australia
115-119 Bathurst Street, Sydney
43 Herschel Street, Brisbane
35 Queensbridge Street, South Bank, Melbourne
120 Collins Street, Melbourne
Riverside Quay, South Bank, Melbourne
70 Southbank Boulevard, Melbourne
Q1, 9 Hamilton Avenue, Surfers Paradise, Gold Coast
Tallest residential towers – International
1st Krasnogvardeysky Avenue, Moscow, Russia
Al Sofouh Road, Dubai, UAE
Burj Mohammed Bin Rashid
Khalifa, Bin Zayed The 1st, Abu Dhabi, UAE
568 Al Marsa, Dubai Marina, UAE
Al Marsa, Dubai Marina, UAE
432 Park Avenue, New York, USA
Luijiazui Finance and Trade Zone, Pudong District, Shanghai, China
1 Sheikh Mohammed bin Rashid Blvd, Dubai, UAE
*Source: Household and Family Projections 2011 to 2036 (series II), released March 2015
Published: Tuesday, February 02, 2016