Density on the rise, but commentators urge caution on new CBD flats
Australia’s demand for medium and higher density housing is at a record high, but property commentators are warning of an oversupply of apartments in some areas.
According to the Bankwest Housing Density Report, more than 43 per cent of new home approvals were for non-standalone dwellings – compared to 27 per cent five years ago.
The General Manager of RentCover, Sharon Fox-Slater, said medium density housing was generally less expensive than a stand-alone property – which appealed to both first homebuyers and investors.
“What some investors fail to realise, from an insurance perspective, is that the insurance of a complex is not enough to protect you as it only covers common areas – not what happens inside your walls,” she noted. “The risks to an investor may include loss of rent situations, damage to contents, and importantly liability risks.”
Many property commentators have recently urged caution when selecting CBD investment properties.
Melbourne CBD has been singled out as being at particular risk of glut – more than 22,000 units were built between 2010 and 2012 and a further 39,000 apartments are either under construction or for sale off the plan.
The Lord Mayor of Melbourne, Robert Doyle, has called for tighter controls on quality – citing a case where a developer tried (unsuccessfully) to get approval for apartments without kitchens.