Demand surges for one-bedroom apartments, normally a shunned segment of the property market

After years of sitting at the bottom of buyers’ wish lists, the humble one-bedroom unit has made something of a comeback this year on the back of surging property prices.

The market for single room attached dwellings has remained predominantly investor-driven, providing an affordable option for renters and delivering high yields for landlords.

But an increasing number of owner occupiers are snapping them up, from budget-conscious first-home buyers to more established purchasers looking to downsize.

In Sydney, there was an 8% year-on-year increase in the number of views for one-bedroom listings in 2021, according to figures from realestate.com.au.

Elsewhere in Australia, the rise was even more pronounced – Canberra saw an 82% surge in views, while Brisbane was up 38% and Adelaide 25%.

Only Melbourne, the city hit hardest by COVID-19 lockdowns, saw a decrease, with 5% fewer views for one-bedders.

“The unit market has been cooling towards the end of the year, so if you’re in the market now, there’s good value,” said Sydney buyer’s agent Bernadette Brennan from Premier Home Finders.

While Ms Brennan’s one-bedroom unit clients are mainly investors, she has noticed an increase in owner-occupier activity.

“First-home buyers may be getting a loan from mum and dad and they’re using the one-bedroom unit to step up into a bigger property later,” she said. “And for those buyers there may not be too much difference between rental expense and mortgage repayments.”

While potential buyers need to be aware that any property under 50sqm will make many lenders skittish – either requiring a much bigger deposit or even seeing a mortgage application refused outright – there are several important advantages to buying a one-bedder.

“They’re cheaper than two-bedroom units but the rental yield can be higher,” Ms Brennan said. “And as an investment they’re really reliable because you’re dealing with either a single person or a couple, rather than flatmates.”

It’s a tale of two cities in the Sydney one-bedroom market.

While there has been a slight cooling in the inner-city market due to a decreasing number of international investors during COVID, other parts of the metropolitan area have been flying.

“It has been a lot stronger than any other year because two-bedroom units are becoming out of reach for first-home buyers,” said Nick Albert, from northern beaches agency Upstate.

“In August, I sold a one-bedroom unit in Dee Why for $850,000 in under two weeks and an off-market unit in Mona Vale sold after the first open house for $798,000.”

Like any other property, a one-bedder’s desirability increases with location and amenity.

Both of Mr Albert’s sales were within two minutes of beaches and local attractions and had easy access to public transport, shopping and dining.

There are also a number of must-haves for the property itself.

According to Silvia Vitale from Belle Property Potts Point, any kind of outlook that does not involve a brick wall or a neighbour’s window is a positive, as well as good appliances and timber floors.

“But one of the essentials is a balcony,” Ms Vitale said. “That’s the one thing that everybody wants.”

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