When buying your first home, each question that you answer will lead to a dozen more – so you had best start finding some answers. One of the first should be: what kind of home are you looking for?
There are several benefits to each type of property, but perhaps one of the most cost effective and convenient is the trusty apartment. Such a property may be cheaper, require less maintenance and even allow you to live in your desired location.
On the other hand, if you buy an apartment you may enjoy lower capital gains and less space. Let's have a closer look at each of these pros and cons, with the goal of helping you answer just one of the questions on the road to buying your first home.
Lower cost, lower capital gains
CoreLogic RP data's monthly indices shows the median price of units across our five biggest capital cities is $591,799. That's over $200,000 less than the median price of detached houses, which sits at a lofty $809,910. The gap's even bigger if you're buying in Sydney or Melbourne, where the median apartment price is over $300,000 less than that of houses. As a result, when figuring out how much you can borrow you may find an apartment is the best option for you.
Apartments may be smaller generally, but they can still be comfortable living spaces.While you may be able to pick an apartment up for less, you may also make a smaller profit when you resell. In fact CoreLogic's data states that during the month of August 2016, median price growth across the five biggest capital cities was 0.17 per cent in units and 1.08 per cent in houses.
This reveals a long term trend of detaches houses growing in value more than units or apartments, perhaps due to the waning supply of land in most city centres.
Their smaller size makes apartments a more convenient home for the cleaning or maintenance averse.
Less space, less hassle
A discussion paper by the Department of Environment, Land and Planning has revealed that 43 per cent of apartments in Melbourne have one bedroom, and have floor space of between 41 and 50 square feet.
Apartments elsewhere in Australia may vary in size, but as a general rule they are smaller than houses. This means if you're after a property with more space for a garden, a pet or perhaps for raising a family, then an apartment may not be the right choice for you.
On the plus side, their smaller size makes apartments a more convenient home for the cleaning or maintenance averse. Your strata fees will cover most maintenance, including upkeep of wiring, plumbing and the buildings exterior. All you'll need to worry about is pushing the vacuum cleaner around the 50 square metres or so inside your property, and perhaps doing the dishes every now and then.
Live where you want to live
The median unit price in Sydney is $736,050 and the median house price is $1113,910, according to CoreLogic. The disparity in price is similar in Melbourne. A recent Economist report claims that these cities are amongst the 10 most liveable in the world based on the measurement of a combination of 30 factors.
Buying an apartment could be the key to living where you want to live. Understandably a large proportion of first home buyers may want to live near the centre of these cities, to access their many lifestyle benefits and be close to work, family and friends. Due to the outrageous price of detaches houses, apartments will be the best option for most.
If you're puzzling over whether now is the time to get onto the property ladder, get in touch with the team at Mortgageport. We give personalised, hands on advice and will be with you from the first phone call, right through to that glorious moment when you pay off your home loan.
Before you sign anything, make sure you know what the costs will be.
