Reasons to choose an Australian house or apartment as your first investment property

FindAHomeLoan Australia

If you’re an overseas non-resident investor (or an expat) looking to buy property in Australia, there are some good reasons why might want to choose a house instead of an apartment at the moment.


1. Oversupply of apartments

The most important reason is that there is currently an oversupply of apartments in Australia. This had led many analysts to conclude that this will affect both the capital growth and rental yield prospects of apartment in the short-term.

When you’re buying an investment property, its potential to generate ongoing rental income and future capital growth should be your two primary investment considerations.


2. You get maximum benefit from the increase in land value over time

When you buy a house and land, you can get the benefit of an increase in the value of the land that it sits on, not just the house itself. If you buy an apartment instead, you’ll share the value of any increase in the land value that the apartment building is on with other apartment owners.

In other words, the capital growth you’ll receive on the increase in land value for a unit will be lower than for a house in the same area.

Land values in Australia have a long-term growth trend, especially in high demand areas such as the major capital cities of Sydney, Melbourne and Brisbane.


3. You don’t have to pay body corporate fees

When you buy an apartment, you’ll need to contribute to body corporate fees to pay for any costs associated with the apartment complex. For example, average body corporate fees in Brisbane are $5000 – $6000 per year.  And if you buy an apartment in a building that has features like lifts, a swimming pool and gym, you’ll pay even higher body corporate fees for those privileges you don’t pay any body corporate fees with a house.


The drawbacks of houses against apartments

Of course, there are also drawbacks to buying a house instead of an apartment that you need to be aware of. The most obvious is that you are 100% responsible for any repairs and maintenance you may need to make to a house.

On the other hand, if you buy an apartment and you need a repair to a part of the building that you share with other apartment owners (like the roof), the cost is shared and paid out of the body corporate fees.

You can also share the cost of expenses like council rates and insurance with an apartment. You can’t do that with a house. When you buy a house, you’re 100% responsible for all the ongoing expenses associated with it.

It can also be more difficult to arrange new house and land package financing than it is to buy a new apartment or townhouse. That’s because there is a two-step financing process. First you finance the buying of the land, then you build and finance the house construction separately. On the other hand, when you’re buying a unit or townhouse, it’s a single step process to arrange your loan for the entire purchase price.

Finally, there is an old saying in real estate that the three most important factors when buying or selling are ‘location, location and location’. Houses are generally more expensive than apartments located in the same area, so you’ll need to be able to spend more to enter the Australian investment property market when buying a house.


How we can help

At FindAHomeLoan, sourcing mortgage solutions from Singapore and Australia for investors looking to buy investment property in countries like Australia is one of our specialities. We can help you to navigate Australia’s mortgage lending restrictions.

We would be happy to speak or meet with you to discuss your needs and goals. We believe you should have a mortgage partner.  Just like you engage a mechanic to make your car run smoothly, we can do the same with your investment property financing.

We’ll take the time to understand your circumstances and provide the best advice.

Contact us now to find out how we can help you!

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