Buying an apartment is not quite the Australian dream, but is the reality for many people — especially with the housing market heating up across the country. However, apartment living doesn’t have to be second-rate, and for many people, it’s a desirable choice.
Sure, you might have less floor space and neighbours that are hard to avoid, but there’s way more to apartment living. Here we’ll discuss the pros and cons of buying an apartment in 2021, especially in light of the pandemic.
In just about all locations across Australia, the median cost to buy an apartment is lower than the median house price. This means that if your budget is lower, or you’d like to spend less on a property, an apartment could be a good option.
This could help you get on the property ladder sooner as you won’t need such a high deposit. Alternatively, spending less means you have more money to invest or spend on other priorities.
If you want to live in an inner-city or beachside suburb with all the conveniences and lifestyle benefits that come attached, you can expect to fork out a lot of money. However, if you are open to buying an apartment, you can live in your ideal location and still remain within budget.
Say you’re desperate to buy a property in Bondi Beach. Based on median property prices, a house will set you back about $3,440,000, while an apartment will set you back about $1,285,000. That’s a massive difference!
Rentvesting is another option for buyers who are keen to maintain their current lifestyle and location, but lack the funds to buy property here. Through rentvesting, you purchase an investment property where you can afford to do so, while continuing to live in your preferred location. Hopefully after a few years, you’ll have saved enough money for a larger deposit to buy where you want, while accruing equity in your investment property.
Another advantage of apartment living that shouldn’t be understated is that you’ll have fewer maintenance responsibilities. When you buy a house, you’ll not only have to take care of the inside of the property, but also the exterior and any gardens.
When you live in an apartment block, maintenance will be organised by a strata committee which you will pay for with strata costs (or body corporate fees). Strata fees typically cover:
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Property investors often opt to buy apartments as they are cheaper, easier to maintain, and often can be easier to find tenants for. However, none of this is guaranteed. Before you buy a rental apartment, think about what would make it more appealing to renters. For example, office space or a separate study will likely prove attractive as the work from home lifestyle becomes the norm.
Something to consider during the pandemic is how decreased migration could affect you as an investor. There are fewer international students and young people moving to Australia, which has led to higher vacancy rates in certain areas. But, if you’re an owner occupier, you could score a good deal on an apartment purchase because of this.
If your investment isn’t panning out the way you’d hoped, you might still be able to benefit from negative gearing.
Unless you’re living in a well-located roomy apartment, you might feel suffocated living in a small space during the COVID-19 pandemic. This feeling only gets worse during lockdowns, so you could find yourself wanting more space - especially outdoors.
Before you purchase an apartment, check whether it is close to parks, walking trails, beaches, or any other outdoor spaces that could fulfil your needs. Some apartment complexes have private or communal gardens, rooftops and courtyards, and finding an apartment with a balcony could make all the difference.
Apartments tend to not be as spacious as houses or townhouses, which can prove challenging if you have children and/or pets. You may have to make more outings than you’d like to keep them all entertained, and you might find it difficult to get some quiet time.
Unlike living in a detached house, you will be in close proximity to your neighbours in an apartment block. This can lead to increased noise levels, and you have to be more conscious that you aren’t disturbing those around you. If the tenant in the unit directly above you enjoys dancing and jumping around their apartment, chances are you’ll notice it.
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
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