Investment choice: House or apartment?

Choosing whether to invest in a house or an apartment is one of the tricky topics in the property industry.

Hidden costs, personal goals, location, and land size all needed to be taken into consideration when making the decision, according to a report by news.com.au.

Things to consider, specifically when purchasing apartments, include the number of units in the complex, the body corporate fees, hidden maintenance costs that may increase the dropping fund costs, rental vacancy rates for the area, and the number of other units competing for renters locally.

“The other thing we would consider, even with units, is how much land content can be attributed for a single unit. Generally, the land component appreciates, and the building component depreciates … so this is definitely something that needs to be considered if long term capital growth is the desired outcome,” Melinda Jennison, Streamline Property qualified property investment advisor, told news.com.au.

Land holding is also essential when buying a house and when considering the appeal for resale.

“(Owner-occupiers) make up 65-70% of all buyers in Australia and investors make up the balance … so we always like to ensure that the house has owner-occupier appeal,” Jennison said.

The advisor said that it is also important to consider the demographic of the suburb’s resident, as well as to understand the zoning of the land and how much of the purchase value could be attributed to the land.

Presenting another perspective, news.com.au reported that houses and land have traditionally outperformed apartments in the country.

 “There’s a lot of unknowns in the unit department; when you buy one, what’s to say they don’t build another 100 next door?” Jonathan Bell, Bell Estate Agents managing director, told news.com.au.

He also said that that there are advantages for investing in apartments, specifically for first homeowners.

“There’s a time and a place for a unit, and a first homeowner could potentially avoid stamp duty, and get the first homeowner’s grant if it was new,” Bell said.