DID you hear the news that in Sydney, a buyer bought a pair of Bondi penthouse apartments in a single transaction? It cracked the most expensive apartment sale record in the country with a whopping price tag of $21m.
Apartments, flats, units – whatever you call them – have often been regarded as a poor cousin in the property ownership stakes. But with transactions like that now going on, it’s time to dispel a few myths for both home seekers and investment buyers.
So should you consider an apartment as a housing option, or stay well clear and only put your hard earned dollars into something with your own front door?
First of all, apartments have significant advantages in the areas of being low maintenance, easy living, they often have very good security, and maybe even views or a great outlook.
However, on the downside, they have many close neighbours on top and below. Loud music must be heard via headphones. You may occasionally have to share all the interesting, sometimes-intimate, details of your closest neighbours heated debate late at night or worse, the making up afterwards. Acoustic control has improved over the years but it does have to be something to consider.
Secondly – but perhaps the most important golden rule – when buying an apartment, to ensure your investment is protected, you should only ever buy in a location and area where you could not purchase a house for the same, or close in value. It is a failure to grasp this important point that results in most of the apartment buying or investing disasters that I see. It makes perfect sense when you think about it? Where in the world are the most highly sought after and desirable apartments? Of course it’s in the centres of our cities – London, New York, Hong Kong, where you simply cannot buy a house/terrace/townhouse for anywhere near the affordability of an apartment and that is why those apartment markets work as well as any freestanding market.
This brings me to my third point. Apartment living, more than any other housing style, is all about location. Apartment living in outer suburban locations and rural areas are just not the norm. And when something is not normal in the housing market, tread carefully as it is often not sought after by buyers, no matter how good it is as a concept.
Central city and urban locations have limited space so naturally they encourage more intense housing styles. But sometimes I see new apartment developments spring up in more suburban, than urban locations, and although they may follow the cheaper than a house rule or boast some nice features, it may not be not enough. Being new is sometimes a drawcard, but in five or 10 years, they will no longer be new. In this scenario, an apartment that cost say $340,000, compared to a house, or townhouse that could have been bought for $370,000 places the value squarely in the house, not the unit.
Finally, if you are sure the apartment is at the right price for the area and in the right location, select carefully.
A good apartment ideally has some form of outside space. Even a tiny balcony for two chairs and a plant pot is a significant bonus. Good apartments need to have a reasonable amount of natural light. Units that run front through to the back of a block, or are on a corner, are always preferable to central ones with only one aspect. However with the right design these one-dimensional units can still feel light so just inspect carefully.
Aspect too is vital, avoid the units with no outlook or which look out to air conditioning condensers or solid brick walls. There are many out there that do, both old and new! If one of these is yours, your only option is to reduce the price to allow for this massive negative. Some buyers will not even consider them no matter how cheap!
Never pay huge premiums, regardless, for going up one level, unless there is a clear aspect advantage. The higher you get, the less buyers will like it, as there comes a point where the views are of nothing but sky and balconies where you sit down and your glass of wine blows over and you return inside resembling someone who has just undertaken their first wing walking training session on a light aircraft.
Apartments can be as safe as houses, but only when you follow these basic points.
The most amazing residential buy I ever made was with a modest two bedroom apartment. It returned 60 per cent capital growth in less than a year in London in the wonderful mid 90s. Oh, those were the days!
????????????????????????Andrew Winter is the host of Selling Houses Australia on Lifestyle, and a finalist in the Astra Awards