Whether to buy a house or a unit is a question that has long been debated by homebuyers. There are pros and cons that you need to carefully assess before you take the plunge into property ownership, and your final decision will come down to your individual circumstances. Let’s take a look at some of the general pros and cons of each.
Let’s start with the pros of buying a house
- Capital growth: According to a report on Domain, houses generally offer better potential for capital growth than units.
- Renovation: Houses can be altered and extended. Adding additional bedrooms and bathrooms for example can add significant value as well as amenity.
- Land: Despite Australia’s vast landmass, most people live around the coastal fringe, making land a valuable resource. As demand exceeds supply in the major centres, land is more likely to increase in value. Unlike a unit, the purchase of a house includes the full land title.
Owning a house seems peachy, but what about the cons?
- Cost: Houses usually cost more to buy than units. According to Domain’s House Price Report June 2015, the median national house price is $701,827, while the median apartment price is $516,723.There can be larger ongoing costs associated with owning a house as well. Council rates are often more for houses than units, and utility and maintenance costs can be higher.
- Location: The biggest negative about buying a house can sometimes come down to the location. Due to higher house prices in many areas, buyers may have to look at less-desirable suburbs where prices might be more affordable.
Now let’s assess the pros of buying a unit
- Price: Apartment complexes are springing up everywhere, and as mentioned, units generally have lower purchase prices than houses in the same suburb.
- Location: The location of unit blocks is often more attractive as well. For example, you might not be able to afford a house in a beachside suburb, especially as a first home buyer, but you might be able to buy a unit.
- Lifestyle options: The market offers an abundance of unit options for every lifestyle, and you can choose the location and facilities that suit you, whether you’d like a pool and gym, or even a community rooftop garden.
That sounds good, what are the cons?
- Costs: Body corporate fees can carry an enormous weight. Unit complexes with additional facilities such as a gym, pool or elevator can cost thousands every year, so it’s essential to weigh up these body corporate fees before you purchase.
- Privacy and noise: It’s hard to live in a unit complex and have peace and quiet all the time. You should be aware of the number of units in a block, and check that the soundproofing is sufficient!
- By laws: Unit owners are required to adhere to certain rules and restrictions applied by the body corporate. Unlike houses, unit owners are generally not permitted to structurally modify their unit configuration without first consulting the body corporate, and in some cases, the other unit owners.
So which to choose?
Units can offer a great location at a more reasonable price, but do come with rules and restrictions, and it’s important you factor in the body corporate fees. Houses, on the other hand, can offer more consistent long-term growth depending on the area, and the ability to renovate, but can represent a larger debt.
Ultimately, there are positives and negatives to buying either a house or a unit. Make the choice that best suits your budget and your needs. And whichever way you go, make sure you protect your investment with a pre purchase building inspection in Sydney, Melbourne or elsewhere in Australia, so you know exactly what you’re buying. Happy house hunting!
By Darel McBride
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