Should you buy a house or an apartment?
It seems to be a very common question when it comes to buying real estate, particularly for first and second-time buyers – will it be better decision to purchase a house or an apartment?
As a starting point, the factors that go into making this decision are mostly personal preferences. These include whether the property is an investment or to be your residence, the location that you’d like to live in, how many people will be living in the property, what types of maintenance you are prepared to carry out personally, and so on and so forth.
Investment vs. Primary Residence
Many investors find apartments to be easier purchases for a number of reasons. Apartments do not necessarily require the larger amount of external maintenance (e.g. gardens, pools) and attention that an individual house will need, and the building’s strata manager/committee will usually take care of most building and remedial work that is required. However, having this advantage comes at the cost of strata levies to the investor, which may have an adverse effect on the rental income that the property delivers.
Investors should also consider the length of time they plan to hold on to a property for and the capital gains desired from the investment. Using historical pricing as a guide, we have seen that both houses and apartments experience value gains; over a short to medium-term period, houses and apartments appear to show similar price gains, however over the longer term houses may see larger growth in value.
For investors, rental potential and income are other factors that require consideration. Many real estate agents believe houses to hold appeal for a larger market of renters, including families with children and pets, who may steer clear of apartment living. Houses also often allow a higher rent to be charged.
Having said this, however, price is obviously a factor that will be of pertinence to many buyers, whether purchasing as an investment or home. While some apartments can be more expensive than houses (e.g. penthouses with water views in costly suburbs), in general terms, houses are usually the more expensive purchase, especially if you are comparing properties in the same area. Apartments therefore may be a more friendly purchase option, especially for first-time buyers.
Location & Space
High density housing is commonly found in city areas and suburbs that are only a short distance from the CBD. Thus, if you desire an inner-city lifestyle, an apartment may be the best property option. However, if you wish to live further away from the city and have enough room to accommodate several people including children and pets, you may find the extra space (both internally and externally) that a house usually provides may be more appropriate for your situation.
In the end, the choice between an apartment and a house very much comes down to your personal circumstances. By thinking about your needs and thoroughly researching the property market at the time you wish to buy, you should be able to reach a decision that is suitable for your situation.
If you would like advice regarding your situation and the decision to buy a house or an apartment, please feel free to visit one of the many CENTURY 21 offices around Australia.