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Are you considering buying a property but stuck between purchasing an apartment vs. a house? Choosing between the two depends on your preference. These preferences are influenced by the lifestyle you want to live and your goals.

You also need to determine whether it's an investment property or if you want to maximise capital returns. Will an apartment suit your personal needs better than a house? Your financial position is also a factor that you should consider when choosing between buying an apartment and buying a house.

To help you make the right decision, we have provided the advantages and disadvantages of buying a house and an apartment. Let's get right into it.

Advantages And Disadvantages Of Buying A House

Buying a house will give you more privacy, more space, and more renovation options. However, this also means more property maintenance, especially if you buy an old property or if you have a garden.

Advantages of buying a house

  • Greater value: In general, the prices of houses grow faster than that of apartments. This implies that you can build wealth faster by owning a home. 
  • Privacy: Living in a house offers you more privacy, unlike living in an apartment, which means you'll be near neighbours. Specifically speaking, you can live without worrying about disturbing your neighbours when you live in a house. 
  • Flexibility: Buying a home gives you more flexibility because you can do what you want when you want to. You don't have a corporation or strata that you must abide by. You only need to keep building and council regulations in mind, and with that, you'll be free to renovate according to your preference. As a house owner, you can upgrade or expand your house to increase its value.
  • Outdoor space: If you have a young child, you could use the backyard space. This could be an entertaining area for your kids, and you could also enjoy the freedom of having your outdoor space.

Disadvantages of buying a house 

  • Higher prices: Buying a house is more expensive than buying a housing unit. You'll have to save for the vast deposit or take out a loan to buy a home. Sometimes, you may need to opt for a house in a cheaper suburb. 
  • Higher costs: Generally, living in a house is more expensive than living in an apartment. You'll be paying more money for bills, and you'll need more furniture and equipment. 
  • Maintenance: The cost of maintaining a house is also higher than that of maintaining an apartment.

Pros And Cons Of Buying An Apartment

Owning an apartment or a unit generally implies lesser costs and maintenance. However, you'll have to pay more body corporate fees and strata fees. You'll also have more neighbours to deal with, which can affect your privacy. 

Pros of buying an apartment

  • Security: You have more security in an apartment than in a house. This is because, in many cases, thieves will need to go through different layers of security before getting to your apartment, which is not the case with most houses.
  • Extra facilities: Buying an apartment gives you access to many building facilities. This includes a shared garden, playground, tennis court, gym, and pool. You need to consider these inclusions when you buy a house or apartment.
  • Location: Most apartments are usually located close to city centres, and with that, you get to live close to everything, including restaurants, work, schools, and transport.
  • Low cost: The general drawback of buying an apartment is reduced space, which results in cheaper gas and electricity bills. 
  • Less maintenance: The cost of maintaining an apartment is generally lower than the cost of maintaining a house.
  • More affordable: Apartments are usually more affordable than houses, but there are a few exceptions to this rule, such as buying a luxury apartment in a hotspot over a small house in a less desired location.

Cons of buying an apartment

  • Less privacy: Living in an apartment places you close to your neighbours, and with that, you might have to deal with hearing your neighbours entertain guests, fight, or do other things. There's also the fact that they can also listen to everything you do.
  • Less space: Apartments don't have as much space as houses.
  • Fees: When you buy an apartment, you'll have to pay a fee to cover maintenance costs. This is a factor you need to consider when calculating costs.
  • Owners/strata corporation by-laws: You must abide by laws imposed on you by the owner's corporation when you live in an apartment. For example, you may not be permitted to have pets on the property or hang washing over the balcony. You won't need to worry about these laws when you buy a house.

What Is A Better Investment? House Or Apartment?

If you're considering property investing, you'll need to pay attention to the apartment vs. house question. This will help you align your goals and strategy according to your preference.

Rental income

Houses generally bring more rental income than apartments. However, this is not always as much as the extra purchasing cost, considering that homes are typically more expensive. An apartment is generally a better option for anyone looking to minimise expenses and maximise rental income. However, it's also advisable to consider capital growth in addition to rental income.

Capital growth

The focus of most investors is on making capital gains, which is basically a result of an increase in property value. In rapidly growing marketing, most properties' value doubles within 5 to 10 years. This investment strategy has allowed many Australians to create enormous wealth. It's also a key contributing factor in the recent property boom.

In general, the capital growth for houses is higher than for apartments. Also, most Aussies prefer to own land and buy a home than buy a unit from an apartment complex. However, this trend is rapidly changing as many Australians now buy apartments.

Buying A House Vs. An Apartment: Key Factors

Ongoing property costs

One of the most fundamental things to consider when purchasing a property is budget. This includes the cost of acquisition and the ongoing cost. Apartments are generally more affordable in terms of acquisition costs. However, the ongoing cost for apartments can be more than a home.

There are many property costs that you should consider in addition to the investment loan. For an apartment, you'll need to pay ground rent and maintenance fees for the building, and this can include maintenance fees for shared spaces, gardens, and hallways. You won't have to make these payments with a house.

Home loan

When it comes to loans, there are variable home loans to consider. However, securing a loan approval depends on many factors. This includes your standard living cost, the property's postcode, and your credit history. The processes involved in mortgage application also vary.

When buying an apartment, you also need to consider the lending issues you're likely to face, especially in areas of oversupply. In such areas, there's an oversupply of apartments, and as such, lenders are not always willing to provide a loan because apartment values are likely to decrease.

Understand Your Needs Before Buying

Whether you're an investor or an owner-occupier, the best way to solve the confusion around buying a house vs. an apartment is to consider your needs and preferences and plan.

For example, there may be better options than buying an apartment for someone considering starting a family. However, for someone with kids who are likely to leave within a few years, a big house will not be the best option to buy.

Therefore, you must first identify your needs, which should be for both your short-term and long-term needs. With that, deciding whether to buy an apartment or a house will be easy.

Whichever option you choose, make sure to reach out to a pre-purchase building inspector to conduct a thorough inspection of the house or apartment you're buying. This will save you a lot of "unforeseen circumstances" in the future.

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