Invest into APARTMENT or HOUSE? Hear What Vera Zhang says.

• 16 August, 2023
• Posted By: Stage Property admin

The choice between investing in an apartment or a house is a significant decision that can have a profound impact on your financial future. Both options come with their own unique set of advantages, challenges, and considerations. To shed some light on this critical topic, we had the opportunity to sit down with real estate expert Vera Zhang. Here are the factors Vera advises our investors to consider and compare while making the decision about what to buy:

Cost

Question: How do the costs of investing in an apartment compare to a house?

Vera Zhang: "Apartments generally tend to be more affordable upfront, though associated fees like strata can add to ongoing expenses. Houses usually require a higher initial investment but may offer more potential for long-term value growth."

Location

Question: How important is location when choosing between an apartment and a house?

Vera Zhang: "Location is crucial. Apartments are often found in urban centres, providing access to amenities and possibly higher rental demand. Houses in desirable suburban or rural areas may offer more space and potential for appreciation."

Maintenance

Question: What are the differences in maintenance between these two types of properties?

Vera Zhang: "Houses typically require more maintenance, from the garden to the roof, while apartments often have shared common areas maintained through fees. It's a trade-off between personal control and convenience."

Rental Income

Question: How does rental income potential vary between the two?

Vera Zhang: "Apartments in high-demand urban areas might offer higher rental income, while houses in family-friendly neighbourhoods may provide stable, long-term tenants. Analysing local tenant demand is vital."

Appreciation

Question: Can you elaborate on the appreciation prospects for apartments compared to houses?

Vera Zhang: "Houses, particularly those with land, often appreciate more over time. However, well-located apartments can also offer substantial appreciation. It's all about understanding market trends and location-specific dynamics."Let's look at the historical data to see how apartments have performed compared to houses over the past 30, 10, 5 and 1 years respectively."

Over the past 30 years, with dwelling values rising by 409% and 294% respectively across each of the combined capital city and rest of state regions. The higher growth rate across the capital cities probably reflects a combination of higher demand and greater scarcity of supply compared with regional markets, along with more diversified economic conditions within the capital cities.

From the above graph, we can see the average property price has increased in value from 2011. with the recent spike of value during 2020-2021

During the past 5 years, we can see the unit price for all capital cities has risen with an average over 7%. 

From the above graph, we can see the during the last 5 years, Sydney, Perth, Melbourne and Brisbane recorded a positive grow of hosue price. However, the trend seems to picking up for all capital cities.

During the past 12 months, we see dwelling values has increase for Adelaide and Perth. Whilst other capital cities has a correction. 

For Apartment value, during the past 12 months, we can see that Brisbane, Adelaide and Perth see a rise of value, where, other capital cities has declined in value.

Tenant Demand

Question: How does tenant demand influence the decision?

Vera Zhang: "Different areas attract different tenants. Urban settings may favour apartments, while suburban areas may favor houses. Aligning your investment with local demand ensures consistent rental returns."

Flexibility and Control

Question: How do these properties compare in terms of flexibility and control?

Vera Zhang: "Houses offer more flexibility for renovations and modifications, while apartments may have limitations due to strata laws. Consider what level of control and responsibility aligns with your investment goals."

Diversification

Question: What are the diversification opportunities when investing in apartments vs. houses?

Vera Zhang: "A diversified portfolio can mitigate risk. Investing in both types of properties offers exposure to different market segments, helping to create a balanced investment strategy."

Financing Options

Question: How do financing options differ?

Vera Zhang: "Some lenders may have stricter criteria for apartments, particularly in high-density areas. Houses often have more flexible financing options. Consulting with a financial advisor is key."

Exit Strategy

Question: How should an exit strategy factor into this decision?

Vera Zhang: "Consider your long-term goals and how each property type aligns with your exit strategy. Planning this upfront helps ensure that your investment aligns with your future plans and market trends."

Conclusion

The decision between investing in an apartment or a house requires careful consideration of various factors, from cost to exit strategy. Vera Zhang's expert insights emphasize the need for an informed, strategic approach tailored to individual goals and market dynamics.

Whether a seasoned investor or just beginning, keeping these factors in mind will guide you in making the investment choice that aligns with your financial future. Reaching out to a real estate professional like Vera Zhang can further personalize and refine your investment strategy.

What are the Key Differences Between Investing in an Apartment and a House?

Vera Zhang: "When considering apartments and houses, the initial investment can be quite different. Apartments generally have lower purchase prices but might come with additional fees like body corporate or strata fees. Houses, on the other hand, offer more space and potential for customization but often require more maintenance. Location, rental yields, and capital growth are also crucial factors to weigh."

What Should Potential Investors Consider Before Making a Choice?

Vera Zhang: "It's vital to align your investment with your personal goals and risk tolerance. Apartments may provide a more hands-off approach, suitable for those looking for consistent rental income. Houses, however, often offer better long-term capital growth. Market trends, local regulations, and individual preferences must all be taken into consideration."

How Do Financing Options Vary Between Apartments and Houses?

Vera Zhang: "Financing might vary slightly between these two types of properties. Some lenders might have stricter criteria for apartments, especially in high-density areas. Understanding your financing options and working closely with a trusted financial advisor is key to navigating these differences."

What are Vera Zhang's Personal Insights and Recommendations?

Vera Zhang: "In the ever-changing real estate market, flexibility and informed decision-making are paramount. I often recommend a diversified approach, considering both apartments and houses, depending on the market conditions, location, and investor's financial situation. While apartments can be a great entry point for new investors, houses often offer more control and potential for value addition."

Conclusion

Investing in either an apartment or a house can be a rewarding venture if done with careful consideration and proper guidance. Vera Zhang's insights shed light on the complexities and opportunities inherent in both options.

For those looking to take the next step, it's essential to conduct thorough research, consult with professionals like Vera, and align your investment with your unique financial goals and lifestyle preferences. Remember, the choice between an apartment or a house isn't necessarily a one-size-fits-all answer but rather a personal decision that should be tailored to your individual needs and aspirations.

Should you have any questions in regard to buying apartment or house, please do not hesitate to contact us on (08) 9325 9888, email to [email protected]