More Data Reinforcing The Weak Returns Of New Apartments – Something We Have Been Banging On About For Almost Two Decades

Apartments are again in the media being highlighted as a poor choice when it comes to property investment and here is yet more data to prove it.

Core Logic data collected by the Chairman of Property Investment Professionals of Australia and our partner in property education, Peter ‘the Property Professor’ Koulizos, shows that apartment buyers can often expect a loss when it’s time to sell.

Key development sites in the CBD, Glenelg and Newport Quays in Adelaide purchased a decade ago reached an average loss of $166,000 when they were eventually sold.

And yet the median price paid for apartments is increasing. How can that be happening when there are losses recorded across the board for re-sale value?

The answer is that the sale of brand new apartments is skewing the property data for all apartments. New apartments are being built every day, with better finishes and sold for a premium. The high cost of these new developments impacts the property data to show that the average sale price of apartments has increased over time. Which is easy to confuse as an indicator in value growth. But alas, picking a quality asset is not as simple as looking at the median price of apartments or houses over time.

There are many factors which drive property value, the land component of the asset being one of them (and a critical one at that!)

Peter ‘the Property Professor’ Koulizos sheds more light via data based metrics on the importance of picking an asset where the majority of the value is derived from the land, rather than the building for InDaily.

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