Investing in a city bolthole: is now the time to take the financial plunge?

With sea- and tree-change fever sweeping the country, city boltholes are now also in hot demand for those times when you need to physically attend a head office meeting, see a client or get a theatre, opera or urban buzz fix. 

For many, that coast-and-city lifestyle mix is a perfect combination, but when is the best time to invest in an inner-city apartment?

“I think now is a really good time to put your money in the inner city,” says David Carrozza, of Cobden & Hayson, who is selling a one-bedroom apartment in Sydney’s Park Regis for $420,000 to $460,000.

“The city markets have all been affected by COVID-19, and in Sydney, rental returns have fallen by 25 to 30 per cent, and prices have been softening,” he says. 

“A lot of properties, in addition, have been empty for quite a period of time. So I’d advise people to buy now before prices start to pick up again.”

Apartment prices in the city and eastern suburbs of Sydney dropped sharply over 2020 by 3.9 per cent to a median of $960,603, according to the latest Domain House Price Report.

In Melbourne, they’ve fallen by one per cent to $576,000, in Brisbane by three per cent to $395,218 and in Canberra by 1.3 per cent to $485,410. 

That could mean some good buying – as long as purchasers do their homework about the level of demand and supply for the area they’re interested in, and the likelihood of a further fall, or recovery in the medium or long term.

“Prices of inner-city units are falling because people are moving out and, with the closure of the international borders due to COVID-19, there aren’t the tourists or overseas students to fill them,” says SQM Research managing director Louis Christopher. 

“So now could potentially be a really good time to buy because prices have come off, but that’s not to say we’ve hit the bottom yet,” he says.

“We seem to have come off the peak vacancy rate, though – that’s now 8-9 per cent down from 15 per cent – so it’s important to weigh the risks.”

In Melbourne, there are a number of affordable inner-city units now on the market.

Helen Guo of BRADY Residential, for instance, is offering a one-bedroom apartment in the Wills Tower at auction for $350,000 to $380,000.  

“It’s definitely a good time to buy now,” she said.

“A lot of investment properties were in the situation where they couldn’t get tenants and they’re not close to pre-COVID prices. But buyers should make sure they’re buying in good buildings.”

On the Gold Coast, there are also many well-priced units – such as one-beds for $295,000 at the Ruby Surfers Paradise building, and a two-bed sold at Burleigh Heads for $515,000 – despite the fact that unit prices on the Gold Coast generally bucked the trend and rose over 2020 by 7.1 per cent to a median of $450,000.

“Prices have gone up here, but there’s still a lot more potential to increase further,” says Braidon Smith of PRD Burleigh Heads. “So many people are moving here from Brisbane and interstate because of the lifestyle and they can now work remotely. Prices have got a lot further to go.”