The Australian housing landscape is changing, and there’s no surprise that single bedroom apartments are on the rise.
Living close to bustling cities, and away from the countryside, is what young working individuals ideate as they flock toward the mainland.
Melbourne, of course, is no stranger to these hopeful first time buyers looking to settle and is even projected to leave behind Sydney as Australia’s biggest city by 2030.
But this is not the only reason why one bedroom investment in Melbourne is booming.
We’ve put together a list of benefits for you to decide for yourself and join in on this great investment.
Take a look.
Benefits of Investing in 1 Bedroom Apartments in Melbourne
Across cities and throughout the past, single bedroom apartment living has been associated with students, temporary workers, or travellers chasing a more transient lifestyle, but the culture is now shifting.
One bedroom and even studio apartments are being considered by the growing number of lone-persons and couples for long term living. Gone are the days when homeowners used to actively look for accommodation outside the city or in greater suburbs to have access to large chunks of land.
Now, a one bedroom apartment in a convenient location would be worth much more than a two-bedroom apartment in a far-off suburb.
This type of living also brings the added ease of maintenance and up-keep. Let’s not forget, many apartment complexes come with their own set of amenities, which for a first time buyer sounds like a treat. With the limited number of rooms, apartment managed gardens, and car-parking areas, there is simply much less to worry about.
Students, lone-persons, single parents, and even small families are increasingly comfortable trading a larger space for a smaller one, if it has an accessible location and more amenities or maybe even a stunning view.
What this means for you as a property investor is that you can now see a greater return on smaller properties, like a 1 bedroom apartment in Melbourne!
This southern Australian metropolis is growing at a rapid pace and with that the Melbourne Central Business District (CBD) has become the most densely populated suburb in the country.
One-bedroom apartments can yield higher rental returns than larger spaces, especially if located in the inner-city (around CBD) and coastal suburbs, and since there is convenience in lower upkeep, they can be a great investment option, especially for beginners.
With earlier trends and demographics, two-bedroom units have been the hot topic with soaring property prices and high resale values. This made one-bedroom units a less desirable option in comparison, driving down the cost of buying these spaces.
We see these same spaces rising in demand over the next many years, and combined with the lower supply of one-bedroom units, the time is ripe for buyers to invest now and make future capital gains.
Plus if you’re one looking to settle within the inner city radius only, buying a house there may not be a possibility with rising inflation rates and mortgages and it is certainly cheaper to invest in a smaller space and still reap all the benefits of living in the city.
Perhaps as a bonus, by opting for smaller living spaces, you can even use the resulting savings to vacation the right way by travelling around without the despair of impending debt looming over you.
Willing to invest but not yet ready to move into a one-bedroom apartment?
Single bedroom units can be ideal for short-term renting and that can give you a great deal of flexibility. You can take in tenants at your own convenience, without having to commit long-term.
Listing a one bedroom apartment on Airbnb can also help you attract responsible guests (singles and couples) and avoid damaging party situations many Airbnb hosts have complained about with larger units.
In addition, with low maintenance costs and rents that are market competitive, they can be a great way to increase rental yield. Renting through AirBnB can yield more return on an investment property if you are comfortable with renting for shorter stays and being hands-on with cleaning and maintenance. And what better size for this setup but a one-bedroom apartment?
Things to Consider for a 1 bedroom apartment investment
Even though we’ve explained how a one bedroom apartment can be a lucrative investment entry point, not all apartments make the cut and you should keep in mind the following when taking this decision:
Location is key to any real estate investment decision, because it is one of those fixed factors you can not change in the long run.
Sure, you can remodel your apartment or add more facilities to it as time goes by, but that’s about it.
A location of convenience is one with grocery stores, cafes & restaurants, hospitals, schools and public transport accessibility nearby (both pre-existing and with future development potential).
If Melbourne has been your home at some point, there’s a good chance you would have had to choose between commuting from the quiet outer suburbs, or living in a busier, more accessible dwelling around the vibrant CBD.
Navigating between the choices of CBD and other inner-city postcodes is also important: while a CBD property may give you the benefit of being where the energy is, it could become impossible to move around the area during rush hours.
In-house amenities are a must have when deciding to invest in a one bedroom apartment.
Make sure the apartment comes with a parking space. For car-owners and property buyers, parking spaces in the city are no joke (they can even be rented out if not used by you or the tenant) and having a secure garage can be a bonus.
You should also look for secondary facilities when buying a small space. Having laundromats, balconies and gardens will only drive the value of your apartment up and are considered important for many buyers and tenants (balconies, or gardens can up your apartment’s square footage and that is another contributor to rental returns and gains).
Any additional amenities like recreation centres and gyms are a personal choice and may or may not be worthwhile for some people. Just make sure these embellishments do not end up in higher maintenance costs for you.
3. Building Architecture
When it comes to landmark and historic cities like Melbourne, the age of the building and the resonating architecture are important for investment. People will pay more for living in buildings with longstanding heritage, and once they’re labelled ‘vintage’, their property values can only go up.
Apartments in newer, high-rise buildings can be tempting to buy for their sleeker designs and contemporary approach but seeing them stacked along similar towers each with many levels of generic units can be quite boring.
However, when considering vintage buildings (which do have their charm), it is important to evaluate their plans and facilities, since practices like insulation and soundproofing have come a long way since some of these were built.
4. Interior & Space
Space is essentially the size of your apartment, which for a one bedroom apartment can feel quite constricting.
In a dense city like Melbourne, nobody expects massive floor space on a budget, but a well planned apartment will maximise the space it does have and find ways to make it seem larger.
This can mean features like storage facilities (e.g. utility closets) or even a balcony with adequate space. An open plan design can make a space seem larger, but structural columns and ductwork can minimise even a larger layout.
For tenants and buyers alike, everyone wants to put their best foot forward when welcoming guests over, and having a clumsy space to show for what may otherwise be a great apartment investment can be disappointing.
So before you make any decisions, check the square footage before putting a payment down on any new unit, and also visit to see the interior for yourself.
Views are especially important in high-rise apartments, and a well-placed window or balcony can make a huge difference in opening up a smaller apartment to the fresh air and some scenic sunsets. Of course, being located in a green and serene neighbourhood can be a plus here.
You should be wary of not only what your current view is, but also keep in mind what new developments and construction might interfere in the future.
The last thing you’d want is to have a perfect apartment but with a subpar view of an under-construction pit or a garbage filled back alley. A mistake like that is bound to drive down your apartment’s popularity and demand.
In a Nutshell
Melbourne is the place to be for investors, renters and rentees alike.
With rising demand for one bedroom apartments in Melbourne’s main city, make sure to invest carefully in the right kind with the perfect mix of location, design, space, views and amenities.
Regardless of how you view it, as a dream apartment, a rental, or the beginning of a short-term AirBnB experiment; a one-bedroom in Melbourne will be a great first step in your investment journey.