With the direction of interest rates on the minds of buyers as we enter 2024, many first-time purchasers are settling on an apartment rather than stretching finances further to secure a detached house.
Prices of detached properties generally rise faster than apartments because of the intrinsic land value.
However, apartment living is becoming increasingly popular, especially with younger and older buyers – and that’s been delivering solid medium-term capital gain.
Apartment buyers will need a slightly different approach to buying a house and should be well versed in issues of strata committee costs, by-laws and permissions.
These guidelines are designed to help first-time apartment buyers.
Spending limit
Determine how much you’re prepared to spend on your first property. You can use your pre-approved amount as the benchmark. Still, you may be more comfortable looking at properties under this limit to ensure you keep mortgage costs manageable.
Building quality
While you may love the apartment, you need to pay attention to the state of the building overall. If it’s rundown and needs significant repairs, then some big bills may come your way as a co-owner.
Strata committee
It’s wise to arrange a due diligence check on the strata committee. You should determine whether any major works are planned and whether the committee has sufficient funds to cover maintenance. Avoid being landed with substantial maintenance costs as a new owner because the strata committee has little or no money.
Size counts
Study floorplans carefully. You want the layout to maximise the available space. Watch for wasted areas, such as long corridors linking a living room to bedrooms.
Block-buster
Apartments in small blocks of eight units or fewer are well regarded and usually appreciate faster than those with 20+ units or more. A lock-up garage and storage space are also significant assets.
Be realistic
Cheaper units needing improvements, such as a new kitchen and bathroom, will often end up costing as much as better-quality apartments.
Top spot
Location is essential for your convenience and selling the property quickly when the time is right. Those who love apartment living want to be near transport, schools, shops and other local amenities. You should also consider crime levels, the character of the neighbourhood and any future local development plans.
Scope creep
When looking at apartments, it’s easy to find yourself looking at increasingly expensive properties with better outlooks and new kitchens and bathrooms. Looking at these apartments can waste your time if they’re unaffordable.