[h1]Eyeing an apartment[/h1]
Apartment living is becoming a popular lifestyle for Australians looking for affordable property, but there are costs and considerations you may not be aware of.
As lifestyles have changed and affordability has become more of a challenge, apartments have become increasingly popular – the ‘great Australian dream’ may no longer be a big house on a big block.
And you only need to look at the data to see the price difference. According to the August RP Data-Rismark Daily Home Value Index, while the median Australian house price is $595,000 the median unit price is $480,000 – a difference of more than $115,000*.
Apartment living offers many benefits – as well as a generally smaller price tag – and for the time-poor, having to do less maintenance than would be required for a house, would be close to top of the list. Meanwhile, units may offer investors a better investment yield than a house, with generally lower purchase prices and currently strong rental amounts.
According to research by RP Data, units are a more popular choice for investment than houses. Their data show that nationally, 58 per cent of units are investor-owned, compared to 21 per cent of houses*.
Don’t, however, let the lower price tag blind you to other important considerations, such as ongoing costs for which you may not have budgeted.
When purchasing an apartment there are the added considerations of strata titles and body corporates.
With strata title, you also become a joint-owner of the common property of the complex which is an important factor to consider, as it may impact your ability to renovate or alter the property.
You may also be obliged to contribute to body corporate fees. The body corporate makes many important decisions – including those around major capital expenditure – so you should ask to review the minutes of previous meetings to get a sense of what the executive is like.
Are they likely to oversee the upkeep of the property responsibly? Are there a lot of expenses on the horizon?
Also, while the price tag might be cheaper, getting a loan may not be as easy as for a house (although it obviously depends on how much you can put down as a deposit). This is because some lenders prefer houses – and are more likely to approve a loan – because of the added security of land value.
* RP Data-Rismark Hedonic Index July 2012, published 1 August 2012