A homeowner’s journey | First home – apartment or house?

FIRST HOME - APARTMENT OR HOUSE? 

Home ownership is a journey and it’s slightly different for each of us, however there are some common milestones along the way. In the coming months we’ll focus on each of those milestones, starting today with that important rite of passage; buying your first home.   

For some, the first step on the property ladder will be buying an apartment. The good news is they tend to be cheaper than houses and nearer to city centres, so you are close to the action for both work and play. The bad news is they have some unique characteristics that buyers need to be aware of. Here are a few watch-outs for those looking to buy an apartment.

• Forget the 20% deposit rule, the bank is likely to want more when lending on apartments, so that means you’ll need more saved. Call them to get the facts.

• Get used to the idea of being part of a community and making collective, rather than individual decisions. That means a residents’ association calls the shots, and going with the majority.

• Check out body corporate fees. The 12 high-speed elevators, heated pool, sauna and tennis courts might sound great but they come at a cost. If you’re not a big user of the facilities you are probably subsidising someone who is.

• Read the latest body corporate meeting minutes – what are the residents concerned about?

• Ask the council what can be built on neighbouring properties. That glorious view might already be earmarked for a new tower block.

• How easy will it be to sell? Is there something that makes it different from every other apartment in town? 

• Capital gains tend to be lower with apartments, so bear that in mind when buying.

IF IT’S A HOUSE THAT YOU’RE BUYING, HERE ARE A FEW THINGS TO THINK OF:

• Talk to the bank about finance, get pre-approval and find out if there are any restrictions, e.g, on mono-clad homes, odd legal titles, etc.

• Your budget will limit your options, but look for a home with potential to improve or extend and add value if possible.

• Make a call between where you live and what you live in. You will getter a bigger home if you move further from the city or to a less desirable area, but decide if that’s what you want. 

• Trust your instincts; if you feel like a fish out of water on your first visit to a neighbourhood it’s unlikely that you will ever feel comfortable there. Find a smaller home in a more suitable suburb.

• How handy is it to your workplace? A bargain house that costs you an extra two hours’ commuting every day probably isn’t a bargain at all.

• What are local schools like? Even if you don’t have children, the quality of local schools might be important to future buyers.

• Think about re-sale. This is your first rung on the property ladder and it’s important to buy with future capital gain in mind.

Whether you’re looking for an apartment or a house, just remember you’re likely to see a whole lot of properties before you finally find “the one”. So just have fun with it, and try not to let the disappointments get you down. You’ll land a winner eventually!

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This article is intended as a general discussion only. BNZ recommends the recipient get independent advice. The views expressed are the writer’s own and do not necessarily represent those of BNZ or its related entities.