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Townhouse vs house vs apartment: which is a better investment?

By George Hadgelias

Home ownership is changing in Australia, with more buyers moving away from the traditional house.

These days, you also have the option of a townhouse, apartment or a single dwelling.

Depending on what you are looking for in a home, one of these types of properties may be more suitable.

However, they each come with drawbacks, so it’s important to know what you are buying to avoid making a bad investment.

Things to consider before picking one

When choosing between a house, townhouse and apartment, there are a few factors to think about.

This includes whether your family will grow and if you will need more space in the future. Meanwhile, if it is an investment property, location might be more important than the size of the property.

Answering the below questions before you buy should help you decide which property type is best for you, reducing the likelihood of making a costly mistake.

Questions to ask yourself:

  • how big is your family?
  • will you need to upsize or downsize in the future?
  • do you have pets?
  • do you want to entertain outside?
  • is a garage essential?
  • would you like to renovate?
  • do you like living close to your neighbours?
  • do you mind sharing facilities?
  • what can you afford?
  • do you know what a strata scheme is?
  • do you mind paying body corporate fees?
  • do you want to own physical land?
  • will you be a owner-occupier forever, or might you rent out the property?
  • House

    This is the traditional stand-alone dwelling where the buyer is purchasing the land on an individual title.

    This is the most popular property type for owner-occupiers in Australia and allows the most flexibility and privacy. However, it has its drawbacks, including: more space to clean and maintain, higher utility bills, and sole responsibility for maintenance and repairs.

    Duplexes also fall into this category, because, although they may share an adjoining wall, they usually stand on separate titles.

    Pros

    • More space: houses have minimum block sizes set by the government and the dwellings tend to be larger than a unit or townhouse.
    • Outdoor space: most houses come with a front or back garden, or both.
    • Privacy: houses offer greater privacy, as you are not sharing common areas with multiple people.
    • Flexibility: a shared title often brings rules, especially when it comes to renovations. On a single title, you are free to do what you like, permitting council regulations.
    • Better finance: lenders prefer freeholds and will likely lend you more money when purchasing a house.
    • Resale value: in general, houses appreciate better than townhouse and apartments.
    • Cons

      • Expensive: houses tend to be more expensive than other types of property in the same area.
      • Location: in popular locations, houses are either more expensive or snapped up by developers.
      • Maintenance: keeping a house in good nick is a lot of work. There is cleaning, gardening, plumbing and a whole range of other tasks – not to mention repairs.
      • Bigger bills: houses are generally harder to heat and cool, which means larger utility bills. You must also take out insurance by yourself, which means bigger premiums.

      Apartment

      An apartment is a self-contained flat that is part of a bigger complex.

      When you own a unit, you are on a strata title, which means the flat belongs to you but ownership of the common property is shared with the different owners.

      It also means that you will belong to a body corporate and must comply with certain bylaws. As a member of a body corporate, you’ll need to pay body corporate fees, to cover the repair and maintenance of the common areas. The exact amount you pay will depend on the size of the lot you own, as well as the sizing of the building complex, its age and its amenities.

      A cheaper purchase price and more convenient location tend to be the biggest benefits of owning an apartment, which means they’re generally best suited to property investors and single, first home owners.

      Pros

      • Lower purchase price: apartments are generally more affordable than stand-alone houses.
      • Less maintenance: the body corporate repairs and maintain the common areas.
      • Security: new apartments tend to have swipe cards and CCTV, and having more people around is generally a plus.
      • Amenities: units can come with added extras such as gyms, pools, lifts and tennis courts.
      • Lower bills: living in a unit will cost you less when it comes to water, heating and gas.
      • Cons

        • Less space: flats are usually smaller.
        • Body corporate fees: these can be cheap in older apartments but can become quite expensive if your complex has lots of amenities.
        • Reduced flexibility: bylaws stipulate whether you can have pets, allowable noise levels, where you can hang your washing, and whether you can renovate.
        • Fewer parking spaces: there is increased competition for car spaces around high-rises and an individual space on your title can be costly.

        Townhouse

        A townhouse is a multi-level building designed to mimic a traditional house that is owned on a strata title. This means you own the dwelling but share the land with other people.

        Typically, townhouses offer the space and privacy of a house, giving your family space to move around, and often come with an outside courtyard.

        However, you still have a body corporate and, therefore, face similar restrictions to an apartment.

        Pros

        • Space: townhouses are often two or three-storeys and have more room than an apartment.
        • Privacy: designed in a similar way to a house, townhouses don’t have any shared areas.
        • Limited freedom: you are still bound by bylaws, but these tend to be more relaxed than apartment complexes.
        • Price: townhouses are cheaper than houses.
        • Location: buying a townhouse closer to the city or beach, or in a competitive real estate market is more affordable than buying a house.
        • Cons

          • Space: less area than a house.
          • Price: more expensive than an apartment.
          • Shared title: you are on a strata scheme.
          • No individuality: townhouses are often the same layout and design as the neighbouring buildings and tend to lack individuality.
          • Privacy: you have less private space than in a house and typically share walls with your neighbours.
          • Land: smaller lot size.
          • Stairs: townhouses typically span two to three storeys, which may not be suitable for elderly or disabled owners.
          • Resale value: townhouses usually experience less capital growth than a house, roughly the same as an apartment.
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