With an oversupply of apartments forcing down prices, now may seem like a good time to downsize to a unit.
Meanwhile, people invested in apartments may be getting a little nervous that the glut could wipe some of the value off their investment or make it hard to find renters.
But property experts advise holding off on making a move, because snagging an apartment at a lower price than you might have expected is only one element of a complex lifestyle decision.
And, possibly surprisingly, rents are holding steady, which should calm investors’ nerves.
The Australian reported today that apartment values in the five state capitals dropped more aggressively than house values last month. Numbers from property data firm CoreLogic showed that apartment values were down 2.4 per cent in May, greater than the 0.8 per cent drop in house prices.
AMP Capital chief economist Shane Oliver told The Australian that he expected unit prices in parts of Sydney and Melbourne to fall by 15 to 20 per cent in total.
But Ben Myers, executive director of retirement living at the Property Council of Australia, urged people to be cautious about purchasing just because prices were falling, and instead consider downsizing from a more wholistic viewpoint.
“Property prices are always difficult to predict,” Myers told Starts at 60. “The financial part of ‘rightsizing’ is just one aspect of the transaction; there are the many lifestyle benefits, such as lower maintenance and extended independence, which are incredibly valuable to health and wellbeing and hard to measure in monetary terms.”
Instead, Myers recommended seeking independent financial advice if you were thinking seriously about selling the family home in favour of a smaller abode.
“If you have financial concerns about the value of your property and how it will impact your ability to live the way you want to in retirement, we strongly recommend seeking independent financial advice so you have peace of mind about any decision you’re about to make,” he said.
Meanwhile, in what should provide some relief for property investors, rent.com.au‘s figures showed that the average median rent for Sydney and Melbourne increased by 2.72 per cent and 1.26 per cent, respectively, in May, while rents in Brisbane, Perth, Adelaide, Canberra and Hobart were flat.
Darwin was the only capital city to record a decrease in rental prices, with rents dropping by 6.52 per cent.