Why Buy An Apartment? The Apartment vs House Debate in Australia
Australia’s traditional image of home ownership is based around a freestanding house and a white picket fence, but a new era of modern apartment living has begun.
Research by the University of NSW shows that one in six Australians is now living in a strata-level dwelling such as an apartment or townhouse – a sharp increase in the past two years. 1
While affordability is a major factor behind this demographic shift, it not the only one. Liveability, commutability, and sustainability are also seen as key drivers.
Domain editor Alice Stolz says modern apartments are much better designed that those from previous generations and are tailored to the diverse needs of residents, including families.
“Many families are embracing apartment living for the first time because it means they can live where they want to live, such as in their dream school catchments,” she said. 2
Other benefits of apartment living include flexible floorplans, in-house recreational facilities, off-street parking, modern security systems and, in some cases, even a concierge service.
Apartment living is also more sustainable than traditional suburban housing since it promotes a more efficient use of building materials, lower energy consumption and easier access to public transport.
Property Council of Australia chief executive Ken Morrison says that new apartment developments will play an important role in changing how our cities function, allowing Australia to reach its greenhouse targets.
“If we’re going to design our cities sustainably, then we need to put more housing around transport and more transport around housing,” he said. 3
Off the plan makes sense
Buying into a brand-new apartment development during the planning and construction phase, known as buying off the plan, offers several advantages for owner-occupiers and investors alike.
Buying off the plan allows you to choose an apartment that meets your needs and in a location of your choice. You can then use the extra time before moving in to save additional money for your new investment.
Here are Five of the key advantages:
Capital growth
If the apartment increases in value from the time you pay your deposit and final settlement, you will enjoy a capital gain;
Transfer duty savings
In NSW, newly built apartments under the value of $800,000 do not attract transfer duty – a substantial saving for buyers;
Grants and concessions
First home buyers qualify for several government assistance packages, meaning you could buy an apartment with just a 2% deposit;
Builder’s guarantee
Under NSW law builders are liable for any major defect for a period of six years and two years for minor repairs;
Extra time to save
Once you have paid a deposit there is nothing to spend until settlement day – providing more time to top up your savings.
Investors enjoy a range of tax benefits from owning an off the plan apartment, such as depreciation on fixtures and fittings, plus an income stream from an appreciating asset.
Find the right development
Whether you are an owner-occupier or investor, there are number of important criteria that any new development must meet. Here are some of the questions potential buyers should ask:
- What is the total floor size
- Are the bedrooms big enough
- Do I like the floorplan
- How much natural light is there
- Is there lift access to all floors
- What security systems have been installed
- Is there on-site parking, plus a space for visitors
- Will I have a storage cage in the car park
- What communal amenities are offered
- Ho much are the annual strata fees
- Are the fittings and fixtures of good quality
- Is the location near schools, shops and transport
- What after-sales support is being offered
In addition, investors will want to know about the current rental demand in the area and the weekly rental return they can expect to enjoy. This data is readily available from SQM Research.
The next few steps
Once you have chosen an apartment and a location that meets your requirements, you can proceed with the purchase. Here are the essential last steps:
- Speak to a participating lender about government support; 4
- Make sure you have the required deposit in place;
- Organise a loan from your bank or mortgage broker;
- Clarify what strata fees are due and when;
- Conduct a detailed property inspection;
- Ask a solicitor to check your contract before signing;
- Exchange contracts; 5
- Final settlement.
In addition to the purchase price of the property, buyers need to set aside sufficient funds to pay legal costs, loan establishment fees, conveyancing fees, transfer duty (if applicable) and Mortgage Lenders’ Insurance (if applicable).
Case Study: The Gladstone Village, Merrylands
First home buyers and investors are excited about the imminent completion of Quartz, the first release of The Gladstone Village, ALAND’s masterplanned community located in the heart of Merrylands. One-bedroom apartments at Quartz start from $544,500 and residents enjoy resort-style facilities, including a swimming pool and barbecue area, plus good access to schools, shops and transport. With the completion date approaching, stock is limited, so please contact the ALAND Sales Team on 1800 025 263 or fill out your details below.
1 Source: The Property Tribune
2 Source: Domain
3 Source: Domain
4 Source: Australian Government
5 Source: NSW Government