Buying a unit of apartment in Australia has become a more popular choice in recent years, and there can indeed be some advantages to apartment dwelling or medium density living.
Apartments can be more conveniently located, they can be secure and relatively low maintenance, and often units present a more affordable price entry point for buyers.
On the other hand, buying a property on a strata scheme or body corporate can bring its own issues and risks that need to be carefully weighed up before your commit to proceeding.
Here are 6 things to consider before you buy a unit or apartment:
1 – Your future requirements
Living in medium-density developments can be ideal for many younger buyers and professionals, especially if it means you can live close to your place of work and all the desirable amenities.
But your living and space requirements will likely change over time, especially if you decide to start a family, so it’s worth considering whether buying or renting is the right way to go for you.
For more mature buyers and downsizers, consideration of future mobility and how many steps there are in the development might instead be an important factor to consider.
The various factors (such as, for example, potential noise levels and whether pets are allowed) will differ according to your circumstances, but it’s worth spending some time on visualising your plans.
2 – Know what you are getting
While the properties in a development might often appear to be similar, each individual unit will have its own unique characteristics.
Consider the aspect of the unit, and whether it is likely to be light or dark. Does the unit have some outdoor space such as a balcony so that you can enjoy some fresh air and sunlight?
Newer units are often designed with an appropriate laundry facility in mind, but this is not always the case in older buildings.
Will you have dedicated parking, and a storage cage? What is the security of the development like?
3 – You MUST understand the strata scheme
One of the and most common and critical mistakes made by buyers is not understanding the strata scheme or body corporate.
It’s crucial to commission a strata search report to understand whether the sinking and admin funds are well capitalised (or whether special levies might be upcoming), the future budgets and forecasts for insurance, repairs and maintenance, and any other issues which have been raised in meetings (such as noise complaints, or other local issues).
A detailed strata report need not be cost prohibitive and it could potentially be the most important document you ever order.
Another important matter to factor into your decisions is whether the development has potentially expensive facilities such as a communal swimming pool, dedicated concierge, or gymnasium, and what the associated strata fees and upkeep costs might be.
4 – Understand the building
What is the age of the building or development, and who built it?
In recent years and through Australia’s residential construction boom there have been some high-profile issues with quality issues and construction defects, so it’s vitally important to do your due diligence, and stick to reputable developers with a proven track record with previous projects where at all possible.
Buying brand new properties (and especially ‘off the plan’ purchases where the construction has not yet taken place) will tend to come with more unknowns and uncertainties, so additional care will need to be taken.
5 – Future supply
As noted in our recent oversupply hotspots report, some regions of Australia have suffered from overbuilding of new apartments, and this will tend to have a negative impact on price growth over time.
Check development approvals for the local area, and whether any major new projects are planned or expected.
Generally speaking you will be better served to look for points of scarcity – such as finding a unit with a view, for example – and to aim to buy in areas where height restrictions will limit the supply of new development.
Lower quality apartments which have been constructed with investors rather than owner-occupiers in mind have tended to be smaller internally, and lacking in scarcity value, making them likely poor performers from a price growth perspective.
6 – Focus in on the price
Finally, before you buy, make sure you pay the right price by running a detailed comparable sales analysis, and by understanding the local market dynamics.
Access our unique Property insights tools for free to understand where the higher and lower risk areas are in Australia for buying units.
If you’d like full-service assistance from one of our licensed and trusted buyer’s agents, including market research and potentially sourcing ‘off-market’ deals or silent sales which most buyers never see, please see our WeFind service here.
If you know where and what you want to buy, but your budget doesn’t extend to paying for a full service buyer’s agent fee, please see our more affordable WeBuy service here, which can help to negotiate thousands off your purchase price and de-risk the purchase exercise for you, reducing time, cost, and stress.