Decades ago, it was unusual to find apartment blocks or high-density living outside inner city areas in Australia.
With the ongoing increase in our population and continuing ‘suburb-creep’, apartment blocks and units are now very much part of the nation’s housing mix.
In fact, according to 2016 census data from the ABS, apartments and flats now make up over 13% of this country’s housing stock.
If you’re looking to buy a property and you’re trying to decide between a house or an apartment, it pays to consider the advantages and drawbacks of both types of properties.
Before you start looking for a place to live, put some thought into the following:
- Budget – how much do you have to spend and what capacity would you have to service a mortgage?
- How much space do you need, and will this change along with life events such as starting a family, retiring or downsizing, or needing accommodation for older parents or other family members?
- Do you need to be close to schools, public transport, hospitals or other facilities, and how important is it to be close to your place of employment?
- How much furniture and personal belongings would you have or need to buy to furnish a home?
- Do you have an interest in establishing or maintaining a garden?
Benefits of Buying an Apartment
Smaller Initial Outlay
The current median price of a house in Melbourne is $893,000 (Source: REIV June 2020).This is significantly more than the median apartment/unit price of $641, 000 (Source: REIV June 2020). Do your research in the market in which you intend to buy, as prices vary greatly between markets, and other factors can influence price such as the age and size of the building and the demand for housing in that particular area.
Utilities bills and maintenance costs will usually be lower in an apartment, although this will be offset by the other costs associated with high-density living.
Lower Maintenance Costs
Living in an apartment means less cleaning and maintenance overall, especially to the exterior of your home. You won’t need to maintain a garden, mow lawns or trim back trees, but you will pay body corporate or strata fees to pay for the upkeep of the block and any repairs.
Many apartments blocks- especially those in inner city areas – are now being built with pools, gyms, rooftop gardens, shops, cafes and restaurants and even childcare facilities. These facilities can significantly add to the cost of an apartment but are attractive extras for those who desire a convenient and cosmopolitan lifestyle.
Benefits of Buying a House
Better Capital Growth
There has been concern in recent times about an oversupply of apartments in Melbourne and the impact this has had on capital growth for owners and investors of this type of property. The COVID-19 pandemic had caused a spike in the rental vacancy rate in inner city areas as the international student population has been severely affected, and younger local tenants without job security are moving back home to save money.
If Melbourne’s population growth resumes its expected rate, then an ever-increasing demand for housing will ensure that investors get good returns on their investments.
Houses generally (but not always) provide better capital growth over the long term. Many Australians still prefer the feeling of security that comes with owning a piece of land. This trend is slowly changing, although the majority of Australians still live in houses.
Houses usually bring in more rental income, though this is offset by higher purchasing and loan-servicing cost.
Privacy and Freedom
As a homeowner you undoubtedly have more privacy and more freedom to add to or alter your home as you wish, and increased privacy as you are not as close to neighbours.
Parking can be a nightmare in built-up areas if you choose to buy an apartment with its own car space. Owning a home means sufficient parking is rarely an issue for you or for friends or family who come to visit.
There’s no doubt about it – a house has a lot more storage space. Buying an apartment may mean paying to keep your belongings in storage, an added and long-term expense.
Whether you decide on a house or an apartment, buying a home is a big investment in time, money and emotion. Make sure you are fully informed before you bid at auction or make an offer.
A good-quality pre-purchase house inspection can give you confidence in your investment and increase your negotiating power before you sign on the dotted line.
Call The Home Inspection Hub to book an inspection with one of our experienced and fully-qualified inspectors. Call 1300 071 283 or ask us for a free quote today.