Is 2020 the time to invest in strata??

Before we start, if you haven’t already read our article on the value of investing in strata property, click here.

The New Year brings a host of investment opportunities to be explored, and property portfolios remain one of the biggest investment priorities in the Australian economy.

By now you’ve discovered strata property – but there’s still a little digging to be done on whether now is the right time.

So, is 2020 the time to invest in strata property? Here’s what the experts are saying about the Australian property market in 2020.

From the experts: 2020 strata property market predictions?

Here are some of the recurring consensus opinions on the Australian property market in 2020;

• Experts are predicting that a lack of additional supply in the land and apartment market should improve the values of properties in this space.

A dip in national construction activity in 2019 following previous oversupply issues cooled off the number of projects coming into the market. Experts believe that this will lead to greater demand for existing strata stock. Experts have described buyer activity as a ‘fear of missing out’.

• There’s also the belief that the unit market will perform better than the housing market, with demand higher than ever, thanks to downsizing

According to Raine & Horne’s executive chairman Angus Raine, the next 12 months are shaping up to be the opportune time for empty-nesters in NSW seeking to downsize into a more “suitable” home. That’s backed up by Commsec, who say developers are catering to this demand for smaller spaces with the average new free-standing house built in Australia over the 2018/19 financial year being just 228.8 square metres – down 1.3% from the previous year and the smallest figure since 2001/2002.

• New builds may end up similarly priced to existing stock because of a lack of confidence in new developments.

Thanks to a series of high profile building defects, particularly in Sydney, plummeting confidence in newer strata developments is expected to see existing stock retain or increase value against new builds. Watch out for any momentum in the calls for a Royal Commission into the construction sector. Cases like the Opal and Mascot Tower developments are examples of this.

What this means for portfolio investments in strata property

• Prioritise properties in established communities, rather than the glitz and glam of new builds.
• Think about what strata properties might appeal to downsizers, and in what areas.
• Due your due diligence on building safety and maintenance in light of recent defect cases.

A recap on the pros and cons of strata investing

Pros;

• Lower costs of the property in relation to the land it occupies.
• High demand in the rental market.

Cons;

• Strata levies can be high
• Collective valuations

Seeking the right advice before buying

Before you take any serious steps towards purchasing a strata titled property, we recommend that seeking advice from qualified professionals with local knowledge and experience can take the headache out of buying property. Experienced and certified real estate professionals such as buyer’s advocates can help simplify the process of buying or selling property, providing you with the knowledge and confidence to make informed commercial investments.

For more information, you may like to read our article on Buying and Selling an Owners Corporation property