Mortgage broker warns inner-city apartments can cost buyers long-term gains

A Melbourne mortgage broker is warning that Australians who prioritise proximity to the central business district by buying inner-city, off-the-plan apartments risk missing out on stronger capital growth and, in some cases, losing money.

Bill Childs, 28, who works as a mortgage broker, said first-time buyers should put emotion to one side when making one of the largest financial decisions of their lives and look beyond the immediate appeal of new, high-rise developments. "The thing is with the inner-city apartments, you'd think they're an amazing deal," he said. "But, these apartments have done terribly."

Childs pointed to Melbourne's Docklands as an example of the trend, noting that the median sale price of units in the development adjacent to the central business district was about $600,000 in 2015 and sat at $584,000 ten years later. "One of the most risky things you can do in property is buying off-the-plan apartments in the cities," he said. "People can lose a lot of money."

The broker's comments reflect industry concerns that some inner-city apartment markets have failed to deliver the same capital gains as houses in suburban or regional locations over comparable periods. Childs urged buyers, particularly those entering the market for the first time, to weigh long-term investment performance rather than being swayed solely by proximity to the CBD or the marketing appeal of new developments.

The Docklands example shows a flat-to-negative movement in median unit prices over a decade, contrasting with historical patterns in many Australian housing markets where detached houses in outer suburbs and regional centres have often recorded stronger capital growth. Childs said buyers need to consider the potential for slower price growth in some apartment markets when calculating future equity and servicing costs.

Industry participants have previously raised a range of factors that can influence apartment performance, including the scale of new supply, building-specific issues and costs associated with strata ownership. Childs' warning focuses on the financial outcomes for owners who buy into inner-city high-rise projects, particularly off-the-plan purchases made before occupation.

Buyers weighing apartment purchases were encouraged by Childs to seek independent advice, to scrutinise projected ongoing costs, and to compare expected long-term returns against alternatives such as houses in suburban or regional markets. He said emotional attachment to a location or the look of a development should not substitute for analysis of historical price movements and projected future performance.

While individual outcomes vary by location, building and timing, Childs' remarks add to ongoing debate among brokers, buyers and analysts about where first-time purchasers should focus their searches if capital growth is the primary objective. The Docklands median price comparison is one tangible illustration cited by Childs of how an inner-city apartment market can lag broader housing gains over a prolonged period.