As a first-home buyer, choosing between a house and an apartment can be overwhelming. According to the ANZ Corelogic Housing Affordability Report 2024, the portion of income required to service a mortgage on a median value house is 54.7%, compared to 41.6% for apartments. However, affordability isn’t the only factor to consider. Your budget, lifestyle preferences, and long-term goals play a crucial role in this decision.
If you’re looking for more space for a growing family or value a backyard, a house may suit your needs. On the other hand, apartments are often closer to city centres, offering better amenities and shorter commutes. Future priorities like investment potential are also important—houses generally offer higher capital growth, while apartments can be more appealing for rental income.
This article provides a detailed comparison of houses and apartments, helping you evaluate which option aligns better with your needs, lifestyle, and financial goals for your first home purchase.
What To Consider Before Choosing A House Or Apartment For Your First Home
Taking into account these factors will help you assess your circumstances and priorities.
Cost
Apartments are often more affordable than houses, particularly in urban areas. CoreLogic data shows the difference between median capital city house and unit values grew from 16.7% in March 2020 to 45.2% ($293,950) by early 2024. With a higher purchase price, the 20% deposit required is also higher.
Location
Apartments are often located in or near urban centres, which can be convenient for work or leisure activities but houses may offer more space and a quieter, more suburban lifestyle. There are various factors that contribute to making a location desirable.
Lifestyle
Size can make a difference here. If you are a single person or a couple without children, an apartment may be more suitable, as it is easier to maintain and has less space to clean. If you have a family, a house may offer more space and privacy.
Future Plans
Your future plans may also play a role in your decision. If you plan on starting a family or having more space for guests, a house may be more suitable. If you plan on moving in the near future or want a more low-maintenance lifestyle, an apartment may be a better option.
Amenities
Apartments may come with amenities like a gym or swimming pool, while houses typically do not. Consider what amenities are important to you and whether you are willing to pay strata fees for them.
Resale Value
It is important to consider the housing market and the potential for appreciation when assessing the resale value of any property. Houses may appreciate more quickly in value than apartments, which can be an important factor if you plan on selling in the future.
Home Loan Experts’ specialist mortgage broker Rojan Paudel, says:
“Normally, apartments are more affordable than houses. If you are looking to live near a city, an apartment might help a first-home buyer get into the market sooner. That being said, having a house equals more land, so it may potentially have more capital growth than an apartment. This is not enough to make a decision, it’s crucial to analyse your personal circumstances and financial situation.”
Buying an Apartment vs. Buying a House
| Aspect | Buying An Apartment | Buying A House |
|---|---|---|
Affordability | Generally more affordable. You can often find apartments in prime locations that you might not be able to afford if you were looking for a house. | Higher upfront costs like stamp duty, inspections and even LMI (if applicable). You also need to save a higher deposit for a home. |
Maintenance | Low maintenance Building management handles common areas and exterior repairs. | Higher maintenance Homeowners handle all tasks like lawn care, roof repairs, and general upkeep. |
Security | Often includes security features like CCTV, 24-hour guards, and gated communities. | Security depends on location and individual measures like alarm systems. |
Amenities | Access to shared facilities like gyms, pools, and community centres. | Fewer shared amenities; any additional facilities must be installed and maintained by the homeowner. |
Privacy and Space | Limited privacy and space due to proximity to other units and shared walls. | Greater privacy and more space, including backyards and distance from neighbours. |
Customisation | Limited options due to building management rules; some renovations may require approval. | Full control to customise and renovate both interior and exterior. |
Location | Often located in central areas or near public transport, workplaces, and cultural attractions. | Can be located in suburban or rural areas, which may require longer commutes but offer larger properties. |
Appreciation Potential | Slower appreciation compared to houses, primarily driven by building value. | Higher appreciation potential due to land value, which tends to increase over time. |
Investment Potential | High rental demand in urban areas; renovations can boost resale value. | Can build significant equity over time, with potential tax benefits for mortgage interest and property taxes. |
Flexibility | Easier to sell or rent; good for those who value flexibility and mobility. | Less flexible due to the higher costs and effort required to sell or relocate. |
Market Risks | May face slower value growth, which could impact resale returns. | Higher exposure to market fluctuations, but long-term appreciation potential is stronger. |
Utility Costs | Lower utility bills due to smaller size. | Higher utility bills because of larger size and additional features. |
Overall Suitability | Suitable for first-time buyers, those on a budget, or people seeking low-maintenance living. | Ideal for those looking for long-term stability, privacy, space, and higher appreciation potential. |
If you are a first-home buyer and have decided to purchase a house or an apartment, we can assist you in finding your ideal lender with a competitive interest rate.
Call us on 1300 889 743 or complete our assessment form.
Talk To An ExpertFrequently Asked Questions
Can I get a mortgage for an apartment?
Yes, you can get a mortgage if you buy an apartment. However, apartments under 40 square meters might face stricter lending conditions.
Do I need to insure my apartment like a house?
Can I renovate an apartment that I own?
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