Tiny apartments still command high prices

 

The West Australian
Inner city one-bedroom apartments in Perth are shrinking at a rate of 4sqm a year, as the number of people looking to move into single or couple’s accommodation continues to grow, More than 200 one-bedroom apartments were sold in the City of Perth in the past 12 months, according to the Australian Property Institute, ranging from 29sqm bedsits up to 105sqm flats. Data from API Price Finder shows that while the median size of apartments sold in 2010-11 was 78sqm, the median fell to 74sqm last year and was 70sqm in 2012-13. Sales of the newest apartments, those built in the past two years, show a median size of just 68sqm. At the same time, the median price for a one-bedroom city unit rose from $380,000 in 2010-11 to $411,000 in the past year, with the most expensive apartments selling for more than $600,000. API WA president Dennis Volk said the size of one-bedroom apartments may seem tiny by Australian standards, but people from overseas used to smaller homes had little difficulty with a compressed floor plan. For locals wanting to secure a spot in the city, a studio or micro apartment at relatively affordable prices was an attractive proposition. “The Perth CBD is a strong market for residential apartments, which will only be enhanced through current and future projects, so securing at a good price a CBD strata apartment makes for a sound investment,” he said. “Just as with small lot subdivisions, there is a real market for small space out there, affordability being the key issue in the current market.” Mr Volk said changing demographics, including the rise of the single-person household, had also spurred the market. Single-person households have grown to almost a quarter of households, according to the Australian Bureau of Statistics. By 2026, they are expected to make up 30 per cent of households. Other inner-city areas also recorded a large number of one-bedroom sales. In the City of Vincent, which includes Mt Lawley, parts of West Perth and Highgate, 130 one-bedroom units changed hands, with a median size of just 47sqm. The biggest unit sold in Vincent was a 114sqm one-bedroom townhouse in Flarence Place, West Perth, which went for $585,000. The smallest apartments have less than a third of that room but sell for twice the price per square metre of a Peppermint Grove mansion. A 45-year-old bedsit with 33sqm sold on Lincoln Street for $264,000 in September, representing $8000 per sqm, while several 40-year-old bedsits with 29sqm on Goderich Street sold for about 7500 per sqm. Two new 46sqm units on Murray Street in Central Perth sold for more than $9000 per sqm earlier this year. In contrast, big blocks in Peppermint Grove frequently sold for less than $4000 per sqm. Mr Volk said it was not unusual for very small properties to command a high per square metre price but developers had to be cautious about setting the entry point too high. “You have to put the pr1ce per square metre into context and you would generally expect the smaller lot to be more expensive on a rate per square metre basis, JJ he said. “It is when a standard twa-bedroom apartment is being priced at $10,000 per sqm or more that you would become concerned, as that price is getting up there and the apartment would need to have all the bells and whistles.” Mr Volk said the growing acceptance of small units had made it possible for developers to be more flexible with apartment layouts, using one-bedroom and studio apartments to create a variety of product within a multi-level complex. “This gives them the opportunity to provide a variety of products and that blend certainly would assist them in capitalising on profitability,” he said. “They can offer a mix and that’s important. Gone are the days when you could just put two bedrooms into a high rise because there are affordability expectations out there. “You might have a floor plate where the layout was awkward or one apartment was too big, which in turn created an unachievable price. “Now they can create the 30sqm bedsit to take advantage of the space or a view that would otherwise be lost.”