Time to read : 5 Minutes
The choice between buying a house or an apartment is a big one. When I worked as a mortgage broker, one of the first questions I asked clients was ‘why’ they’re buying a property. By knowing their motivation, I could then establish if they were a first-time buyer, an investor, or downsizing.
If you’re in the market to buy a house or apartment, each type of property will offer distinct advantages depending on your goals and lifestyle. Here’s a breakdown of what you should know.
If you’re a first-time home buyer
For first-time buyers, affordability is understandably your primary concern. Apartments generally offer a lower entry point than houses, making them a popular choice if you’re wanting to get into the market without a huge upfront cost.
Apartments also tend to be closer to urban centers, giving you easier access to convenient amenities, public transport, and work commutes. These lifestyle perks tend to appeal to younger buyers starting their careers and enjoying city life.
Yes, but… buying a house might appeal to first-time buyers who think more long-term, especially if you’re planning on starting a family soon. While houses are generally more expensive, they come with more room to grow, both physically (with extra rooms and outdoor space) and financially.
Houses tend to appreciate faster than apartments due to their underlying land value. So, if your budget allows and you can foresee your future needs including wanting more space, a house can be a wise long-term choice for you.
Be aware: if you're looking into buying a newer apartment... there's been a rise in recent instances of builders cutting corners to save on costs resulting in owners having to deal with expensive building defects.
Do your due diligence and source an independent building inspection. It may cost more money but it could work out better than buying a report from the real estate agency.
Ask whether the body corporate minutes are available, and read them to see if there are any red flags. Your solicitor or conveyancer can also do this for you.
Verdict:
An apartment can be a very good option if you’re seeking affordability and / or a central location.
A house may suit you better if you’re working with a larger budget and have plans for family or just want – and can afford – the future flexibility.
If you’re looking for an investment property
Investors are typically after properties that offer strong rental yields and some potential for capital growth. It isn’t always easy to find a property that delivers both equally well.
Apartments often deliver higher rental yields, especially in high-demand urban areas. These properties attract a steady pool of tenants, such as young professionals or students, due to their location and accessibility.
Apartments also require less maintenance, as shared spaces are managed by a body corporate, making them more of a ‘hands-off’ investment than houses.
Yes, but… for investors focused on longer-term capital growth, house values tend to outperform apartments over time.
Land value drives the appreciation of houses, and because land is scarce, it typically gains value over time.
Houses offer the flexibility to add value through major renovations or extensions, potentially boosting your rental income and any future resale price.
For investors willing to put in some work and invest for the longer-term, a house can provide better returns than an apartment – albeit with a higher buy-in price.
Verdict:
An apartment can be a good option for investors seeking a steady rental income and minimal maintenance costs.
A house tends to be better for investors focused on longer-term capital gains and there’s the potential to add value.
If you’re a downsizer
Whether your kids have left home, your partner has passed on, or your family home no longer serves its purpose, downsizing can offer ease of maintenance and lifestyle. This is a contrast to a bigger home that usually offers large living spaces and capital growth.
Apartments, with their lower maintenance costs, can offer a hassle-free lifestyle with communal upkeep and access to amenities like gyms, pools, and security.
Living in an apartment also means less outdoor chores to tackle, such as:
gardening or mowing lawns
no climbing ladders to clear gutters or cleaning debris from the roof
fewer general repairs and maintenance such as replacing pavers, decking or painting.
This can be appealing if you’re looking to reduce the time and effort you spend on chores.
Downsizers who value location often find apartments near urban centers more appealing, with cafes, restaurants, and cultural venues just a stroll away – plus medical facilities, if you require access to a wider range of healthcare services.
Yes, but... some downsizers prefer the space and familiarity of a house, especially if gardening or hosting gatherings are enjoyed. A smaller, single-storey house, villa or townhouse in a quiet suburb can offer a peaceful setting without sacrificing all your outdoor private spaces.
Downsizers with pets or those who appreciate more privacy might find a house more comfortable and flexible than an apartment.
Verdict:
Apartments are perfect for downsizers seeking a low-maintenance, amenity-rich lifestyle close to facilities that may become important in later life.
Houses are best suited for those who want to retain more personal space and privacy, and access to external amenities may be less important.
Bottom line
Choosing between a house and an apartment depends largely on your lifestyle and your financial goals.
For first-time buyers, apartments offer an affordable entry into the market, while houses may be worth the investment for those planning ahead.
Investors can find solid rental yields in apartments, but houses can deliver greater long-term growth.
Downsizers may enjoy the convenience of apartment living, but some might still prefer the quiet space of a smaller townhouse or villa.
Before making a decision, consider your priorities carefully to find the right property type that meets your unique needs.
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Compare & SaveFinancial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
