SHOULD YOU BUY AN APARTMENT OR A HOUSE?
With Sydney and Melbourne’s housing markets having recorded their first months of growth since the market peak, we will see significant numbers of first home buyers finding the confidence to enter the market” says First National Real Estate’s chief executive Ray Ellis.
The urge to buy, to some extent, comes from the improved market conditions, but it’s expected that the Federal Government’s First Home Loan Deposit Scheme will also create a surge.
So, if you do decide to enter the market now, how do you choose between a house and an apartment? A 3-bedroom house in a regional area could be a better opportunity for you than a small inner-city apartment. Similarly, a spacious apartment a little out of the city may serve your plans better, compared with committing to a huge mortgage for a house that offers more space than you need.
Having said that, the term ‘safe as houses’ did not come from thin air. Apartments may be cheaper overall, but there is something to be said for the security of investing in a house when you’re a first home buyer. There are risks in investing in an apartment today – more so than ever before. Some apartment complexes can deliver less than 10 years of solid value to their owners, before they turn into money pits, as shoddy workmanship and hasty construction start to reveal themselves. In addition, fears about the potential rectification costs of combustible cladding remain a relative unknown.
When looking for your first property, the key things to consider are location, affordability and ongoing costs such as maintenance, body corporate fees, and/or rates. Once these things have all been taken into consideration, you can weigh the potential to add value through renovations, are then you’re better able to decide the true investment potential of the property you choose and make the best decision for your current goals.
Ultimately, houses tend to offer more opportunity for differentiation than units, and that means more potential for capital gain. Find one with a poorly presented garden and interior and you could be on a winner. Rip up the carpets, polish those beautiful timber floors hiding underneath, ditch the ugly curtains, renovate the kitchen and bathroom, and get planting in the garden and within months, you’ll be offering an entirely different proposition to the next buyer.