The type of property you should be buying to get into the best spots for a lot less

In a tougher-than-ever market for first home buyers, is it time to rethink the value of buying a studio apartment?

Government policies of decades past have created the current legacy felt in the property market: houses are painfully expensive and out of reach for many Australians.

Add to that rapid population growth and a historic lack of supply, and we're constantly scrambling for ways to 'get on the ladder'; to build up a portfolio to a point where we can eventually nab that 'forever home'.

According to the Australian Housing and Urban Research Institute, "Australian Census data from the last 30 years reveal a significant decrease in home ownership for each successive generation of 25-39 year olds."

So the ideal vision of owning a house with a backyard has had to shift with the times.

Now, apartments are emerging as the addendum to the Aussie property dream.

Unit builds are on the rise, especially since the government's Housing Accord targets were announced.

In the last census, the ABS reported that, "the proportion of apartments continues to increase, with apartments accounting for nearly one-third (30.9 per cent) of the increase in private dwellings since 2016.

If you're just getting started and are limited in your borrowing capacity, is it time to re-think the option of a studio apartment?

Is there value in a studio apartment?

Another hangover from the Aussie dream of owning a house is that studios were thought of as poor buys.

But this sentiment is changing - with one major bank responding to a clear market shift.

"Commonwealth Bank recently changed their loan policy to include units as small as 30 square metres," says Founder and Mortgage Broker of Madd Loans, George Samios.

"It's become obvious that there's interest in smaller units and that this move from CBA is being informed by the market."

Known as the 'Studio King', BresicWhitney sales agent Nuri Shik is renowned for his knowledge of this market in Sydney's Inner East.

He finds that the value in a studio purchase is maximised by buying in areas where both demand and property values are high.

"Studio apartments can offer a more affordable entry point into the property market for buyers, or into suburbs that may have higher median dwelling values across larger apartments and townhouses," he says.

"Studios also offer a compelling option for buyers who may be looking for a Sydney 'bolthole', and for investors seeking stable rental returns."

What makes a studio a good buy?

Like everything with property, whether something is a good buy or not is far more nuanced and dependent on many factors, regardless of dwelling type.

"Every property purchase has different considerations, including things like the building's history, condition, amenity, and location," says Mr Shik.

"Generally speaking, the studios that perform well over time are those that are well-built and have been well-managed."

Mr Samios, who lives in Queensland, is quite strict on the parameters of what constitutes a good studio purchase. He says it mainly comes down to location and supply and demand.

"Like they say, location, location, location is everything, because that is what informs demand," says Mr Samios.

He references buyers who have lost money on studios in areas like Cairns, but had great results in areas like Burleigh on the Gold Coast.

He also points to Noosa as a place to put on your radar.

While not a studio, Mr Samios was particularly impressed by a recent studio listing on Noosa's Hastings Street - a 55-square-metre rooftop apartment that is now under offer, asking $6.95 million.

The Noosa Council has strict development regulations that effectively ban high-rise buildings so that the area's character and lifestyle is maintained. This has a major impact on the supply and demand of apartments.

"There's only one Hasting street. There's only one beach there, and there's only so much real estate on it. There isn't a large supply of this kind of stock, and that is what's important to understand," says Mr Samios.

Similarly, in major cities like Sydney, Mr Shik finds that lifestyle and prime locations are the ideal target.

"Studios in the lifestyle locations, particularly the Eastern Suburbs and Inner City, are quite well received by the market due to the sought-after nature of these suburbs," he says.

Who is buying studios?

Mr Shik has decades of expertise in servicing this market sector in Sydney, which gives an insight into buyers and their preferences.

"Studios are most commonly purchased by first-home buyers and mum-and-dad investors," he says.

"Some buyers prefer studios in slightly smaller blocks, while others are focused on homes with particular history or original character."