Buy a house or apartment

Every first home buyer has to make a choice when searching for a new home – whether to buy their very own house with a garden or an apartment that’s close to transport, looks good and is affordable.

There are excellent benefits to both and ways to discover whether buying a house or an apartment best suits you.

The house

Advantages of buying a house
A house usually appreciates more than an apartment. The main reason is simple: land. When you own a house, you control the land as well, whereas if you own an apartment you cannot control what can be done with that land – it’s up to all the owners to decide. Another advantage of a house is there are usually fewer restrictions on it than on an apartment, such as having pets and renovating

Disadvantages of buying a house
The cost of buying a house in a convenient area for a first home buyer can be high, meaning you risk taking on too big a mortgage. Houses can be maintenance heavy and require large sums of money to fix structural problems.

The apartment

The most common types of apartment are strata title and company title. Strata title is more usual. If you buy a strata title unit you become part of an owners’ corporation, which controls the administration and any funding of common property and you pay strata fees.

Company title unit owners are buying shares in a private company; owning a certain number of shares entitles the shareholder to exclusive possession of a particular unit. The shareholders vote to decide company rules governing occupation, including rights to lease, sell or transfer shareholdings. One downside is that some lenders are less willing to lend on this type of apartment.

Advantages of buying an apartment
An apartment is easy to look after. You don’t need to repaint exterior walls, think about maintenance, look after a lawn or worry about external security. Apartment complexes often have bonus features such as a swimming pool, gym and barbecue areas. You may be able to afford an apartment in just the area you want, whereas owning a house in the same area might be beyond your budget.

Disadvantages of buying an apartment
Rules are often tougher for apartments than for a house. Apartments come with strata fees and you should check how much they are. Next, look at body corporate restrictions: ask the real estate agent how much freedom you have to renovate, take down a wall, sand floorboards, add a balcony, etc. With apartments all major renovations will need to be cleared by the building’s body corporate.

Investment property

If you are choosing an investment property as a first home, both houses and apartments can pay off:

• Family renters can be keen on both houses and apartments. Houses tend to be a more attractive option to families.
• Individual or group renters tend to look for properties close to amenities such as universities, shops and public transport. An apartment can be excellent if you want to rent it to a sole tenant, while a group of students may look to rent a house near a university.
• Long-term growth: properties near the water always offer good growth because all types of buyers will be interested. This also goes for properties in family-friendly suburbs with good schools and cheaper suburbs with ‘yet to be discovered’ potential.

It’s your home

Well-meaning friends and family will advise you on what they think is the best option. Yet both houses and apartments can deliver positive returns. What you need to do, ultimately, is consider these things:

• Are you hoping to live in your property long-term? If so, where do you really want to live? Are you happy with the terms? With a house, you need to maintain a garden and with an older property, you will have upkeep and repairs. With an apartment, you will be bound by the terms of the body corporate; you pay strata fees and need to get permission to renovate.
• Do you believe the value of your property will increase? A basic rule of property buying is that the price of a property should increase by more than the interest you have paid for your loan.

What are you looking for in your new home?

This is the fun part! If you’re buying a property to live in, then your needs and desires will dictate what you buy – coupled, of course, with what you can afford. So it’s important to spend some time weighing up what’s really important to you.

Take a tour through our guide to some common features to consider when looking for a home, set out below:

Light and space

Light and space are important features for most home buyers. Take note of the rooms in your current living environment which you enjoy being in and the chances are they have a high level of natural light and a spacious feeling. Look out for sunlight and design/lay-out that creates a sense of space.

To DIY or not to DIY?

If you are buying a home as an investment, are you keen on DIY renovation? If you are, then you should consider whether you will be able to carry out all renovations yourself or whether you’ll engage tradespeople to do some for you.

If you’re not a DIY person, then consider how much money you can afford to pay a professional to carry out the renovations. You may wish to budget some or all of your renovation costs into the overall amount you borrow to purchase the property.

Close to amenities

Are you happy to drive to the nearest shop, or would you prefer to be within walking distance? Is there a bus stop or train station close to the property? What about schools?

Being close to amenities is not something everyone needs, but if you’re the kind of person who likes to be ‘in among it’ then this should probably be a high priority.

Kitchen and bathroom

Research shows a standout kitchen or bathroom really makes a difference to a home buyer’s perception of a property. If you’re planning to lease your property, keep in mind that families with young children will probably want things like a bathtub, while young couples and professionals are more interested in a top-notch kitchen, generally speaking.

Parking

Consider the type and amount of parking available. If a home has its own car space, that’s a brilliant value-add, particularly if the suburb grows in popularity. If it doesn’t, you might like to visit the property at different times of the day and week, to determine how easy it is to find a car space. Carrying a boot-load of groceries two blocks can become exhausting!

Number of bedrooms

If you’re looking for a home for your family or future family, three bedrooms is generally the preferred minimum. When you come to sell your property, three-bedroom houses tend to attract a wider number of buyers, because couples and families are both interested in a home with a few rooms. Another option is to look at a one or two-bedroom home with the possibility of extending – either up or out – over the coming years.

DA approval

If you’re considering extending a property – say, adding an extra bedroom, you will most likely need to submit a DA for approval. You should check with the local council to see if a DA is required and if so the likelihood of approval. This is particularly important if the house is heritage-listed or your planned extension/s affects the privacy or sunlight of your neighbours.

Schools

If you have children or plan on having children, you should definitely look into the number and calibre of nearby schools. And even if you have no intention to have children, keep in mind schools are a major attraction for those who do, should you decide to sell the property at some stage.

Living space

Having a large area in which to relax is a key selling point in a home. The lounge room is probably the area in which you will spend most of your time, so make sure you feel comfortable in it and that it is big enough for all your needs and furniture, from the sofa and chairs to the stereo and TV.

Storage

Storage space in a home can be essential. If you have lots of clothes, bed linen, bikes or work equipment that need to be stored, you should probably look for a property that has built-in wardrobes, cupboards and storage space, or the space for you to bring in your own wardrobes or have them installed.

Views

Views can enhance the experience of living in and the value of a house or apartment. They don’t have to be of the sea or the countryside – views of the city, a neighbourhood park or attractive classic building can all add value to a property too.

Home appreciation and resale value

Owning your own home is widely regarded as the great Australian dream.

Making money from owning your own home is even better. With some planning and attention to detail, it is possible to not only enjoy living in your own home but to make a profit too. Ultimately, it all comes down to appreciation.

Real-estate appreciation is the increase in the value of your home and land over time expressed as an average percentage growth each year. A useful rule to remember is that if your home increases in value by 10 per cent every year, it will double in value every seven years.

Appreciation is good because when your home is worth more, you have more equity (ie value in your home) which means you can borrow against it to invest in other projects, if you choose to do so.

Even if you don’t plan to be a super property investor, it’s natural to want the value of your investment to increase. 

For reports on property sales in all suburbs, visit RP Data Australia.

Factors you can partially control when buying property

Where and what property you buy are the two factors that usually affect appreciation more than any other. There are a number of factors that may effect change in a property’s value. To help you assess the potential for appreciation or otherwise, you might consider the following:

• Research: look at recent sales and median sale prices for similar properties, in your suburb. There are many online reports detailing trends: RP Data Australia offers both paid reports and some free suburb reports.
• Size and price: is your property typical for the area and likely to be easily re-sold?
• Longevity: Will you need more/less space in the future?
• Schools and hospitals: are there good local schools for your family, or the family who might buy your house down the track?
• Transport: how easy is it to get to work and travel around the local area?
• Property developments: will you always be trying to sell against newer properties or is the area’s principal use about to change?
• Views and aspect: check whether there are any planning applications pending that may affect your property.

Factors you can control when selling property

When it’s time to sell your property, it’s vital to make a good first impression. A potential buyer is looking at your house because they’ve already decided they’re interested in the area and price range. Now it’s time to ensure your home looks its best.

Complete any repairs before you show the house. The repairs you make before the sale may cost you less than having to discount the purchase price of the property. Put yourself in the position of the buyer and consider the following:

The exterior

• A well cared-for exterior will influence buyers’ opinions of everything else.
• A fresh coat of paint is essential for that all-important first impression.
• The same applies for doors and windows – paint the door, buy a new mat, make sure the bell works and replace any old or cracked windows.
• If you have a garden, ensure it is neat and not covered in leaves or toys.
• Flowering plants in pots brighten up a property instantly.

The Interior

• Make sure the entrance area is clean and bright.
• Eliminate strong smells well in advance – buyers don’t fall in love with houses that smell of cigarettes or dogs.
• People like lots of natural light, so open the blinds and curtains. If you don’t have natural light everywhere, make sure the lighting is as atmospheric as possible in all rooms – no bare bulbs!
• Floors and walls make up most of your house. Repaint walls in a bright, neutral colour and repair any chips or old skirting boards. Depending on the surfaces, consider a professional carpet cleaner and polishing floorboards and cleaning tiles.
• The kitchen and bathroom are extremely important – they must be clean, tidy and bright. Rearrange any cluttered rooms to open them up and consider storing excess furniture while you show the house – people like space, not lots of old chairs.
• If you have a garage, make sure it looks as clean and spacious as possible.