Are one-bedroom apartments gaining favour with property punters?

A big house on a big block of land, with the Hills hoist slowly spinning in the breeze and ample space for a good game of backyard cricket…is the picture most older generations would paint if you asked for their idea of the ‘Great Australian Dream’.

Baby Boomers raised their young families in these constructs of suburban nirvana in the seventies and eighties. apartment

However, the tide is slowly turning, as younger generations show a consistent preference for location over land, where bigger doesn’t necessarily mean better.

A surge in the popularity of vertical living has become evident among Australia’s Gen Y’s in particular, who have come of age this century and started their ascension of the property ladder.

Where once one bedroom apartments were a clever way for developers to cram more properties into one complex and increase profits, now they are becoming a sought after commodity for a growing demographic of smaller, high income professional households.

Data from the Australian Bureau of Statistics predicts a 1.7 million increase in the number of single person households over the next twenty years, with further suggestions that childless couples could outnumber the traditional ‘nuclear family’ by 2031.

Café society

The way young people spend their work and leisure time has altered significantly since I bought my first a house and started a family.

Gen-Y’s want to be ‘where the action is’, which are usually humming inner city neighbourhoods, choc full of latte sipping socialites, boutique shops and plenty of leisurely pursuits.

These areas offer close proximity to CBD offices, as well as the necessary transport links for environmentally aware residents to catch a train, tram or bus to work.

They are also notoriously expensive, with prices in some of the traditionally more sought after postcodes around the likes of Melbourne, Sydney and Brisbane following a consistently above average upward trajectory for decades.

This has made certain areas more ‘exclusive’ and therefore harder to break into as a buyer, particularly looking to secure your first home.

These days acquiring a 2 or 3-bed apartment, let alone some type of terrace or detached dwelling in certain inner city suburbs, is a game for wealthier, upsizing purchasers who have enough financial means to retain their cherished urban lifestyle as they raise a young family.

As a result, the increasing number of singletons and couples without kids seeking affordable accommodation (both to rent and purchase) in their beloved, infrastructure and amenity soaked inner city precincts, has seen a slow but steady rise in the popularity (and price tags) of one-bedroom apartments.

What does this mean for investors?

As a property investor, it’s essential to understand how certain demographic trends impact your market.  apartment

And when I say market, I mean both tenants and owner-occupiers – as the former pay your mortgage, while the latter dictate long-term values.

Gen Y’s are the new property players on the block, so working out what they want from a home to both rent and buy means more likelihood of identifying and securing an investment that will outperform over the next twenty or so years at least (if the longevity of the eighties and nineties suburban McMansion trend is anything to go by).

Of course not any one-bedroom apartment will make the grade with today’s young, discerning and cashed up consumer.

So what constitutes a good one-bedroom apartment property investment?

1. Location

While there are a lot of 1 bedroom apartments in our capital city C.B.D’s, I would avoid these locations, instead opting for inner suburban locations where demand historically supply and there is little or no developable land left. melbourne-396232_1920

Ideally, look for interesting architecture, tree lined streets and lots of lifestyle amenity, within about a ten-kilometre radius of the CBD.

Importantly, look for areas that attract high paid professionals.

While outer suburban planning policies are slowly catching on to the concept of higher density living, apartments are still generally preferred by inner city-ites.

And that’s especially the case for one bedroom apartments

2. Architecture

Avoid generic looking buildings in preference for something with character and/or period features.

3. Building

Large, multi-storey towers generally do not perform as well with regard to long-term values as smaller, boutique blocks of maybe twelve to twenty apartments.

Quite simply, there are too many of them to create that scarcity factor, which ultimately underpins above-average city

Older, smaller complexes usually come with the most charm and desirability and often there will be a notoriously sought after building in certain postcodes.

4. Amenity and infrastructure 

Make sure you buy a property that’s close to all the things that young people want and need, including an abundance of cafes, retail outlets, entertainment precincts and public transport links.

5. Floorplan

Although it may be small, tenants and buyers still want useable space in a one-bed apartment.

Make sure there is plenty of storage, a decent sized separate living space and a good flow to the layout, preferably with outside balcony space.

An abundance of natural light is another good selling point.

6. Position

Where is the apartment situated within the complex?

If it’s on the second or third floor, is there easy access to move furniture in and out?apartment hotel

Consider things like noise, light, outlook, security and access when assessing the position of an apartment in the building.

7. Car space  

Having one on title will immediately increase the value of your investment significantly as well as make it more appealing to a wider range of tenants.

8. Outlook

Great views can add substantially to the appeal and the price tag of an apartment.

Glimpses of the bay, leafy parkland and well-manicured, on-site gardens can all command a premium.

If there happens to be an older building or vacant block next door, check to see if there are plans for future development that might obscure the view you’ve paid for.

The bottom line:

Given Australia’s changing lifestyles and shrinking households, the right type of one bedroom apartment could make a fantastic addition to your property portfolio, providing decent yields and above-average long term gains as a more affordable inner city asset.


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Brett Warren


Brett Warren is Director of Metropole Properties Brisbane and uses his 13 plus years property investment experience to advise clients how to grow, protect and pass on their build their wealth through property. Visit: Metropole Brisbane

'Are one-bedroom apartments gaining favour with property punters?' have 2 comments


    March 20, 2016 Jeff

    This is without a doubt the best advice a property investor could follow.
    This is the exact formula my partner and I follow with our investments thanks in full to learning everything we implement from both Michael Yardney and his team’s property updates, Pete Wargent’s articles, and having read all of both of their books.
    This is most definitely a successful path to follow.
    We bought our first one bed, one bath, one car space apartment in our self managed super to test the waters and were lucky enough to find one in a side street within 500 metres of the heart of Balmain, Sydney and less than a kilometres walk from the ferry into the city and a bus into the city less than 100 metres from the doorstep.
    Needless to say this is never empty, makes a good return and is increasing in value quite nicely – what more could we ask for?
    Our next purchase was a one bed, one bath, one car space with a spacious, bright and modern layout in Manly, Sydney less than 200 metres from the ferry to the city in a ten year old boutique building less than 2 minutes walk from everything Manly has to offer. We probably paid more than we should have for this but our property manager had it rented before we actually owned it for more than we were asking – again, couldn’t be happier with the outcome.
    Our next purchase was a one bed, one bath, one car space in a one year old absolutely unique architecturally designed boutique block of twelve on the border of Bondi and Tamarama, Sydney with ocean and coastline views and a short stroll to either beach and everything this whole area has to offer. We had to pay well to get this one but a think long term this has the potential to be our best. It was already tenanted and he has signed a further two year contract and voiced his desire to stay on for up to maybe another four years beyond this.
    Our latest purchase has taken us out of our comfort zone but is still within similar criteria. We were lucky to be offered a two bed, one bath, one car space in Rose Bay, Sydney bordering on Vaucluse with panoramic city views taking in all of the city, Opera house, harbour bridge and north Sydney. This was offered to us by the same realestate agent who sold us the one at Bondi before it was taken to market. We bought this at what we think was a good price as they were after a quick sale and it is an older 1940 building although the entire building was modernised eleven years ago, it is in dire need of an update to attract the right kind of tenant.
    The one thing we have come to realise is, the tenants that can afford to live in these areas have high expectations when it comes to the quality of the interiors of these apartments. They have no problem paying good money to rent a stylish apartment in a stunning location. All of the apartments we have make better returns than I initially thought possible for properties in essentially capital growth locations.
    The other thing we have noticed is the banks have much more faith in these kinds of locations. The bank who financed our apartment at Rose Bay didn’t even send a valuer to site to value it.
    We could have bought many more properties in less desirable locations but I don’t think the outcome would have been anywhere near as successful as what we have. We were lucky to have immersed ourselves in your valuable information before starting off slowly testing your theories with our superfund and then refinancing our own home, to effectively 100% finance every one of our investments since. Again because of the standard of the properties we have bought we had no problem pushing the boundaries when it came to the banks even with the more restrictive lending criteria.
    I wholeheartedly recommend using the information Michael provides.


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