The investment 68% of experts warn against
Investments in some capital city units can be more than three times as risky as houses, property experts have warned.
While most experts on Finder’s interest rate panel believe houses aren’t a risky investment, 68 per cent believe units in Melbourne and Brisbane pose a risky investment.
Additionally, 61 per cent of experts think Sydney is a risky place for investing in apartments.
“Property prices are on an upward trajectory in a big way,” Graham Cooke, head of consumer research at Finder said.
“Not only has the median house price in Sydney passed $1 million for the first time since 2017, but owner-occupier borrowing hit $20 million for the first time in history in December.
“Despite this boom, rent prices have struggled.”
While capital city house values have climbed 4.4 per cent over the last three months, units have only grown 1.4 per cent, the latest CoreLogic data has revealed.
Cooke said this largely comes down to millions of renters losing work or hours and a sharp reduction in the number of international students and tourists.
Rental markets have also taken some of the wind out of Sydney and Melbourne’s unit markets. In those capital cities, rents have plunged 5.3 per cent in Sydney and 8.0 per cent in Melbourne.
However, CoreLogic noted that the tide appears to be turning in Sydney and Melbourne.
“Sydney’s rental index for units has recorded two successive months of mild rises, while Melbourne unit rents edged higher in February after falling for nine of the previous ten months,” the CoreLogic report stated.
“The improvement in unit rents across Australia’s two largest cities is likely to be at least partially seasonal as demand from domestic students generally rises early in the year, but could also be attributable to more people returning to work in the inner cities as well as workers in some of the hardest hit industries such as hospitality, food and accommodation services returning to employment.”
Despite this, a substantial improvement isn’t in the near future. Rather, inner city apartment rents are likely to stay subdued until international border reopen and migration rates pick up.
“If you have a deposit saved and are deciding between investing in a unit or a house, it’s worth keeping this outlook in mind,” he said.
% who believe units are risky investment
% who believe houses are risky investment
Source: Finder RBA Cash Rate Survey
*Predictions from 19-23 economists
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