Do Not Buy Studio Apartment in Australia

I almost wanted to buy a studio apartment in the city for my own stay and future investment few weeks ago but at the end, I didn't make it because the bank won't lend me money. This is not because of my credit record but it is simply a RULE. No wonder there are still few studio units left over for quite some times in such a strategic place.

There is a rule by banks that they won't lend you money for buying a small property that less than a certain square meters. A studio apartment is a good example. The rule was used to be less than 50 square meters and now I think they change it to less than 40 square meters. Please note this measurement is for internal area and excluding the external (i.e. balcony).

The reason why bank does this is because small unit has no resale value according to them. Oh my God, isn't this a chicken and egg problem? Isn't that you set such a rule that people can't borrow money from you and thus no resale value? No matter what the reason is, "studio apartment has no resale value is a fact". So, I decided to pull out and luckily I hadn't put in any deposit yet.

I can continue to find a way but it may end up getting a higher interest loan which is unnecessary. For renting out, maybe there is value but what if I want to sell it one day? I'm going to have hard time. Now I start to understand why developers are building dual-key apartments. It is basically 2 studio units that stick together and selling it as a whole. I guess this is a loop hole for this bank's rule. :) Smart, isn't it?


Conclusion

So my conclusion is "Do Not Buy Studio Apartment in Australia" even if it is for investment. : ) Dual-key apartment may be an option for investment but I would rather go for either 1-bed or 2-bed rooms apartment which you can use it as investment or for your own stay. This is my opinion of course.

Hope this sharing is worth because it was a surprise to me that bank has such rule here. It becomes worst especially if you have made your deposits or booking fees and yet you fail to get a loan. Good luck!


P/S: Personally, I think studio unit has no resale value is caused by the bank not buyer. It should have high demands due to the higher living cost, higher rental yield and etc.  10 years ago maybe this is true because property price is still at very affordable price for larger property. What if bank removes such rule now? I bet Studio units will be sold like crazy especially in city like Sydney!!!