Buy Inner City Apartment, Or House In Outer Suburbs?

Discussion in 'Social & Local community news' started by Matt F, Oct 14, 2017.

  1. Matt F

    Matt F Well-Known Member

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    Is it better to buy an apartment in the CBD, or a house in the outer suburbs?
    NICOLA POWELL DOMAIN GROUP DATA SCIENTIST OCT 14, 2017

    There is one rule of thumb when it comes to deciding between a house and apartment: growth and yield. This is not applicable in an owner-occupier scenario, but worth considering if circumstances change.

    Apartments tend to generate better rental yields, and investors looking for that high yield rather than capital growth tend to opt for high-rise.

    Melbourne rental yields were 3.48 per cent for a house and 4.52 per cent for a unit during the June quarter, according to Domain data.

    [​IMG]If your long-term goal is to keep your first home as an investment, remember it is all about location for a tenant. Photo: Arsineh Houspian

    If your long-term goal is to keep your first home as an investment, remember it is all about location for a tenant. At this stage of your property journey it is best to re-evaluate and opt for a property ripe for investment. Tax issues are a fundamental component – so do your sums.

    Houses tend to command better long-term capital growth and, for an owner-occupier, this is the ideal scenario. Capital growth equals greater equity in the long run, which will help a leg-up the property ladder at a later date.

    It is the land component of a house purchase that boosts the long-term capital growth and, generally, the building that depreciates over time. Let’s put it into perspective. Melbourne median house prices gained a staggering $113,629 and units $21,022 in the 12 months to the June quarter. Both healthy gains. However, I know which I’d prefer.

    [​IMG]Melbourne median house prices gained a staggering $113,629 and units $21,022 in the 12 months to the June quarter. Photo: Paul Rovere

    There are many factors to consider. Strata fees come with apartment living and are designed to cover the maintenance and common services equally across all residents. By contrast, buying a detached house means all maintenance cost lies firmly with the owner. Non-essential maintenance can be delayed, unlike strata fees that have to be paid regularly and not deferred.

    A major drawcard of apartment living is the proximity to amenities and transport, as well as the inclusions offered in many developments, ranging from a pool and gym, to tennis court and gardens. Typically, the facilities are shared among other residents, with many of the maintenance tasks taken care of by strata. There are few homeowners who can afford their own resort-like inclusions such as a private tennis court and pool.

    Owning a house offers greater flexibility; you can renovate, upgrade or extend, obviously dependent upon council and building regulations.

    Consider the future and plan ahead – this should guide your decision.

    Dr Nicola Powell is a data scientist at Domain Group. Tweet your questions to @DocNicolaPowell.
    https://www.domain.com.au/news/is-i...a-house-in-the-outer-suburbs-20171014-gz08wm/
     

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