When I bought my first property I looked at both apartments and houses. As a single girl at the time an apartment seemed like the obvious choice, and one I initially thought was a given, but I ended up buying a house. Many factors determine the type of property you buy; not just the size, location or price.

The “White Picket Fence” Syndrome

Apartments tend to be cheaper. A three bedroom garden flat can be afforded by a small family but a three bedroom house in the same street usually commands a higher premium. People love the dream of owning their own piece of land, and this creates a higher demand for houses. Apartments are also cheaper because on that same piece of land you can build multiple apartments instead of just one house.

Apartment 1 : House 0

But on the flip side…

Because houses have more perceived value than apartments their value also tends to increase more over the same period of time. Even if houses and apartments both increased 10% in five years, due to the generally higher price of houses, a $500k two bedroom house will increase in value by $50k, whereas a $420k two bedroom apartment will only make you a gain of $42k.

However there are all different types of apartments. An apartment in a high rise amongst many apartment high-rise buildings tends to increase less in value comparatively simply because the supply of apartments in that area is large. However if you buy a beautifully converted warehouse apartment in a small block in an area with a lot of houses, you should see values increase healthily. Look for apartments with good bones and uniqueness.

Apartment 1 : House 1

Size does matter

Generally speaking apartments tend to be smaller dwellings than houses. Its easy to find one bedroom apartments and five bedroom houses but the reverse doesn’t apply. However a small family can happily live in a ground floor apartment with a garden as equally as an older couple can continue to live in their large family home long since vacated by the kids. Depending on your space requirements will generally lean you towards one type of property over another. However it’s important to consider how long you intend to live in the property and whether the size will continue to support your lifestyle.

Apartment 1 : House 1

Do I own the land downunder?

Owning an apartment technically means you own a dwelling but not the land. Apartments are sold under Strata title, which allows individual ownership of part of a property (e.g. the apartment), combined with shared ownership in the remainder (called ‘Common Property’ e.g. foyers, driveways, gardens) through a legal entity called the owners corporation.

Houses are usually sold under Torrens title, which registers the owner’s claim on the land and therefore everything on it.

Apartment 1 : House 2

Hidden costs

Strata ownership for apartments requires the payment of fees and levies to collectively maintain, insure and improve the building and common property. Strata fees can be quite high depending on how many facilities the building has (e.g. lifts, pool, concierge). Levies and special levies can be shockingly high depending on what work needs to be done to the building and common areas. A leaking roof in an apartment building can result in a surprise levy bill for tens of thousands of dollars per apartment.

However owning a house is no free ride either. When the roof needs repairing on your house, guess who foots the whole bill? And ongoing maintenance such as replacing carpet or fixing an old fence occurs more often than you’d like to admit. In addition, houses have regular costs such as building insurance, water rates and land tax (on investment properties), that you don’t pay owning an apartment. You have more control over when some of these costs are incurred with a house but generally you can’t avoid them forever.

Apartment 1 : House 2

Meet the neighbours

With apartments, because you share title in the building with the other apartment owners, coming to a collective decision on how the building is managed or what the fee and levy money is spent on can be challenging to say the least. Horror stories of Owners Corporation meetings are many!

In addition, apartment living means sharing walls, floors and ceilings with your neighbours and because of this your neighbours can determine how you live your life to an extent. Strata Laws can prohibit pets, the apartment below can reject your request to install wooden floors due to added noise, restrictions on structural renovations can prove infuriating, and don’t even think of hanging washing on your balcony! This can prove extremely frustrating and in extreme cases unbearable.

However houses have neighbours too. Planning permission for renovations still needs to be advised to neighbours, who can object. Often your house will share a party wall or fence with a neighbour, which needs to be co-maintained. And certainly in the case of terrace houses, noisy neighbours are as close as any apartment. But owning a house you generally only need to appease your bordering neighbours, and certainly no-one can prohibit you from having pets!

Apartment 1 : House 3

High maintenance

When you own a house you have to organize all of the ongoing maintenance, or if you’re handy or thrifty, do it yourself (eek!). This can take a lot of time whether you do it yourself or outsource, and dealing with tradespeople is often fraught with trauma (see previous post). Whereas the owners corporation for an apartment building will manage maintenance for the building and common spaces, and apartments themselves tend to have little to no gardens and smaller floor space, requiring minimal maintenance.

We moved from a lovely apartment to a house a few years ago and I seriously took for granted how low maintenance the apartment was. No lawn to mow (even the 5m x 1m strip at the house takes time to mow!), no paving to top up with sand, no garden lighting that requires fixing because the rain has snuck into the electrics, no fence to repaint because the rust is starting to show… a good part of every weekend is spent doing “house stuff”.

Apartment 2 : House 3

Security

You cannot compare the security of a 6th floor apartment in a building with multiple key fob security doors and lift access to a house, even with a burglar alarm. Whether it is psychological or not, I felt safer and thought my stuff was safer up in that apartment rather than in my house. There’s something about the lack of access from the street, more people around and generally better security systems that mean apartments tend to be more secure.

In addition to being low maintenance, apartments are generally easier and safer to lock up and leave vacant for a while, such as for long holidays or a pied-a-terre.

There were reports of “spidermen” burglars scaling high-rise apartment blocks on the Gold Coast years ago but lets assume the risk of death generally outweighs the value of a plasma TV strapped to your back.

Apartment 3 : House 3

Scope for Improvement

The clincher for me comes down to the fact that I can add a bedroom to a house but not an apartment. Whether your motivation is capital gain or more space, houses have potential for extension or complete rebuild to something amazing and worth much more than the original property. You can only really do cosmetic renovations to an apartment and I’d be careful on overcapitalizing. The scope to significantly improve a house is worth a lot. Whether you do the extension or simply sell it on, that potential has value, something you can never achieve with an apartment.

Apartment 3 : House 4

So there we have it. Houses win, but only just. I think the true tipping point is the lifestyle factors, and of course, how much is in your budget! I ended up buying a house because I wanted to hold the property for at least 10 years for the capital gain and I knew in that timeframe I would (hopefully!) be having kids so needed more bedrooms and outdoor space. It turned out to be the right choice for me.