To make an informed choice when deciding to buy an apartment over a house, it is essential to ask the right questions.
Blogger: Shane Kempton, CEO, Professionals Real Estate Group
1. Should I buy an apartment or house for my first home?
It largely depends on your budget. Older apartments near city areas tend to be more affordable than building a new home in the outer suburbs. At a later stage, you could consider renting the apartment and using the equity to buy a larger home.
2. Which increases the most in value, apartments or houses?
The location of the property is the most important factor in determining its capital growth rather than size. Choose a property close to the beach, river or city centre, as these locations have the highest capital growth.
3. Which is easier to rent, an apartment or a house?
If you are an investor, then apartments tend to be easier to rent because the majority of rents are young people who like to live near the city. A key thing to consider when renting any property is how much rent you charge, as any property that has an excessive weekly rent will be difficult to lease.
4. Will there be an oversupply of apartments?
In any real estate market, there is always the risk of an oversupply of properties regardless of the whether they are apartments or houses. You should always focus on the location of the property and buy a property that has a scarcity factor, i.e. buying an apartment close to cafes and restaurants.
5. Are there any ownership differences in owning an apartment or house?
The main difference is that when you buy an apartment, there are areas of common ownership in the complex. This is controlled by the strata company, which you will be a member. It may restrict what you can do with your apartment. For example, you may have to get permission from the strata company to have an external air conditioner installed in your apartment.
6. Which is the best to renovate, an old house or apartment?
Apartments tend to be the least expensive to renovate because they are generally much smaller. However, one advantage of renovating a house is that you control the outside area of the home and therefore can improve the street appeal of the property. There is no point is spending lots of money on renovating an apartment if the strata company neglects the outside areas.
7. Are there any additional costs in owning an apartment compared to owning a house?
The main additional cost is strata fees, which you pay to the strata company for the upkeep of the apartment complex. This money is used to maintain common areas, such as gardens, and pay for special insurances, such as public liability. You should check the cost of these strata fees before buying an apartment.
8. Which is the cheapest to own, an apartment or a house?
When you are deciding to buy a house or apartment you should take a comprehensive approach to the costs and savings of owning both properties. For example, you may have to pay strata fees when owning an apartment. However, you may save on transport costs because you may live near the city and also the costs of the maintaining the property may be lower compared to maintaining a larger private home.
9. Are there any special environmental issues I should consider when buying an apartment or house?
Issues such as noise are very important when buying an apartment. If the apartment is near a busy road or located in a noisy area of the complex, it may be more difficult to resell.
10. How many bedrooms do I need in an apartment?
The reality is that family sizes are getting smaller and many apartments have unused bedrooms. More people are living alone and that is why one-bedroom, one-bathroom apartments are becoming very popular. Before buying an apartment, check with local property management companies to ascertain what type of apartments are most in demand by renters in the local area, i.e. one-bedroom, two-bedroom or three-bedroom apartments.