How to decide between a House or Apartment

Many first home buyers are faced with a decision as to which they will buy, an apartment or a house. The decision between these two types of properties is actually more often that not made on their behalf, when location and budget are the two highest tick boxes on the “What is actually important checklist”, in most areas, apartments are much cheaper than houses.

Importance of Location

Working out your budget by speaking to a lender or broker is the first step in the process.Your budget might afford a spacious three-bedroom house in some suburbs, but in others it might only buy you a tiny one-bedroom apartment. Properties closer to the city centre cost more because proximity to high-income employment is a key factor. People also prefer the proximity to food varieties, entertainment and less valuable hours wasted in traffic. Apartments are often concentrated in inner-ring suburbs, near train lines or close to shopping hubs, while outer suburbs are more likely to have houses within first-home buyer budgets.Generally speaking, if you can afford an apartment in a better location than a house, it’s definitely worth considering. Buyers who don’t need a large house and yard are better off buying a well-located apartment due to strong price growth in sought-after areas.

Ongoing Time and Expenses

Owners of houses are responsible for maintaining the building, gardens and lawns on the block. Apartments suit a lot of investment and first home buyers who would prefer to spend their time on other things like socialising, studying or building a business networking, this is because apartment maintenance is often apart of the owners corporations for maintenance of common property. Houses also have higher council rates and insurance, and cost more to heat and cool.

Rental income

All other things being equal, a house will bring in more rental income than an equivalent apartment. But possibly not as much as the extra purchasing cost, given that houses sell at much higher prices. If you're looking to maximise rental income while minimising expenses then an apartment might be a better fit.

Buying a house

Pros

  • Floor space.
  • Outdoor space.
  • Flexibility.
  • Privacy.

Cons

  • Maintenance.
  • Higher ongoing costs (and more bills).

Buying an apartment

Pros

  • More affordable.
  • Less maintenance.
  • Low cost.
  • Location.
  • Extra facilities.
  • Security.

Cons

  • Less space.

House vs apartment: Your Decision

Regardless of whether you’re an owner-occupier or an investor, the best way to solve the apartment vs house dilemma is to consider your needs, plan ahead and make the right decision for you.

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