When it comes to purchasing property buyers, especially first home buyers are faced with many decisions. Whilst the first step should always be to find out how much can be borrowed from the bank, what type of property to purchase is also an important question that needs to be addressed early in the buying cycle.
Below are some questions that are typically asked by our clients when trying to make the decision between buying a unit or house. So, have a read of the differences between both and the aspects you need to take into consideration.
Should I buy a unit or house for my first home?
It largely depends on your personal budget. Older style apartments in near city areas tend to be more affordable than building a new home in the outer suburbs. You could buy a unit to start with, pay down the loan as fast as possible and at a later stage you might consider renting the unit out and using the equity to buy a larger home.
Which increases the most in value – units or houses?
The location of the property is the most important factor in determining its capital growth rather than size. But be careful of new unit purchases as due to over-supply in an area they can drop in value. In addition is always prudent to choose a property close to the beach, river or city centre as these locations have the highest capital growth.
Which is easier to rent – a unit or house?
If you are an investor, then units tend to be easier to rent because many of potential tenants are young people who like to live near the city. A key consideration when renting any property is how much rent you charge. Any property which has an excessive, overpriced weekly rent will be difficult to lease.
Could there be an oversupply of units?
When it comes to buying, there is always the risk of an over-supply of properties regardless of the whether it’s an apartment or house. You should always focus on the location of the property and buy a property which has a scarcity factor i.e. buying an apartment close to cafes and restaurants.
Are there any ownership differences in owning a unit or house?
The main difference is that when you buy a unit, there are areas of common ownership in the complex. This is controlled by the body corporate/strata company, of which you will be a member. It may restrict what you can do with your unit. On a simple level, you may have to get permission to have an external air conditioner installed in your unit or even an external weather blind.
Which is the best to renovate – an old house or unit?
Units and apartments tend to be the least expensive to renovate because they are generally much smaller. However, one advantage of the renovating a house is that you control the outside area of the home and therefore can improve the street appeal of the property. Street appeal rules when it comes to attracting buyers. So, there is no point in spending lots of money on renovating a unit if the body corporate/strata company neglects the outside areas.
Are there any additional costs in owning a unit compared to owning a house?
The main additional cost is strata fees which each unit owner pays to the body corporate/strata company for the upkeep of the unit complex. This money is used to maintain common areas such as gardens and pay for special insurances such as public liability. You should check the cost of these additional fees before buying a unit and how much is currently held in the sinking fund?
Which is the cheapest to own – an unit or house?
When you are deciding to buy a house or unit you should take a comprehensive approach to the costs and savings of owning both properties. For example, you may have to pay strata fees when owning a unit. However, you may save on transport costs because you may live near the city and the costs of maintaining the property may be lower compared to maintaining a larger private home.
Are there any special environmental issues I should consider when buying a unit or house?
Issues such as noise are very important when buying a unit. If the unit or apartment is near a busy road or located in a noisy area of the complex, it may be more difficult to resell. Keep in mind this will be reflected in your original purchase price too.
The final word
There is much to be consider when buy property and hopefully by reading through the above you are now more informed when it comes to the choice between purchasing a unit or house. Arm yourself with information – do lots of research, speak to lots of Real Estate Agents, understand what work might need to be carried out on the property and what this might cost.
Ensuring that you have adequate funds to purchase a property is the first step, so before you start looking for a property to buy make sure that you contact us so we can help you get your loan pre-approved. That way you will have complete clarity on how much money you have available and can be in a strong position to negotiate on price as you will be finance ready.
Ready to get started? Call us now on 1300 888 299 or send us an email and we’ll have one of our Mortgage Brokers contact you to discuss your finance options so you can move forward with purchasing your dream property.
General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to what is appropriate for you.