-May 6, 2022 By City Sales Ltd

Are apartments more affordable than houses?

Are apartments more affordable than houses?

It's no secret that housing prices have been on the rise in recent years, and we expect that (in the long run) to continue. When you're looking to buy in Auckland, it can be difficult to find an affordable place to call home. Are apartments the answer?

Apartments tend to have a lower purchase price than houses, particularly in Auckland but that doesn't mean it will cost you less to start.

This is something we find outrageous when there are such obvious struggles for first home buyers in our city and apartments are such an obvious answer. We continue to speak with politicians and news media on this issue.

Read more with this brilliant article by Newsroom https://www.newsroom.co.nz/small-apartments-big-deposit-bad-deal

The benefits of apartments over houses

Apartments can offer a number of benefits over houses. For one, they're often more affordable than houses in our fair city. Additionally, apartments are often located in more prime areas, meaning you'll have access to more amenities and conveniences than you would with a house. This can be a real bonus if you're looking for an easy life - who wants to spend their weekends mowing the lawn, after all?

If you're looking for an affordable place to live, don't discount apartments - they may be just what you're looking for!

Financing an apartment purchase

Even though purchase prices are often lower for apartments, you may find you need a higher deposit to purchase one as banks tend to consider apartments to be higher risk than stand alone houses meaning a home loan on an apartment can be more difficult to go through.

Where a median house price is $1 million, an apartment in the same area may only be valued at $700,000. While you might assume apartments provide an affordable entry point to the Auckland property market you might be surprised by the barriers to purchase.
The required deposit for an apartment may be 20% right up to 50% or more, compared to 10% for a house. There are even buildings or units banks will not consider lending on at all. So while an apartment may be cheaper to purchase outright, you might need to save a bit longer for your deposit.

This is because apartments are seen as more vulnerable to damage and less likely to hold their value over time. If you look at values over time, this assumption is clearly incorrect. As with just about all property in Auckland - the value of apartments increase year on year just like stand alone housing, albeit at a more reasonable growth rate.

If you're looking for an affordable place to live, be prepared to save up a higher deposit to purchase an apartment.

When won't an apartment be considered for lending?

Size matters! Banks tend to not want to look at anything under 40m² which makes the few affordable properties in Auckland unaffordable to most, and available only to cash buyers.

Leaky or Leasehold. Banks don't want to lend on a property that may lose value such as a leaky building or a leasehold property 'lower land value apartments' where you don't own the land. Unfortunately there are a few leaky apartment buildings throughout the city due to past council and building regulations.

Don't be too dismayed though, with a bit of smart thinking and planning you can still find apartments that banks will lend on and that are within your budget. If you look at 40m² and above on a freehold apartment in a building without any current known issues you will have a good chance of lending. Higher still if you look at properties 50m² and above, freehold and no known issues.

We know what banks like so let your City Sales Realtor know you'll need finance and they can save you time by showing only properties we know banks will approve of.

What's more - we have the lending contacts you need that understand and will lend on apartments. Not all mortgage brokers or bankers understand apartments - in order to be approved you need someone who knows what they are doing, and knows the right people to put your application forward to. Ask us for a referral to our apartment lending mortgage broker today.

 

 

The benefits of apartments over houses

Apartments can offer a number of benefits over houses. For one, they're often more affordable. Additionally, apartments are often located in more prime areas, meaning you'll have access to more amenities and conveniences than you would with a house. This can be a real bonus if you're looking for an easy life - who wants to spend their weekends mowing the lawn, after all?

If you're looking for an affordable place to live, don't discount apartments - they may be just what you're looking for!

The Heritage Hotel, 35 Hobson Street | City Sales Ltd

The Heritage Hotel offers rooftop pool, gym and lounge and tennis court as well as second indoor pool and gym and is a great example of apartment lifestyle living versus house and land maintenance.

Man struggling to maintain house and land | City Sales Ltd

 

The cost of apartments vs houses

In most stand alone houses you will have just your own bills - internet, power, water, gas, gardening, council rates. When it comes to apartments you need to pay a share of the common areas upkeep fees too.

The amount you pay body corporate fees for the year will depend on what apartment building, what it offers (maintenance on pool, gym, concierge, outdoor space, lifts) and what works it is planning on having done in the future on common areas - anything from general daily/weekly cleaning, paint work through to major renovations such as recladding.

The additional benefit of apartment living on top of all these great facilities is that the maintenance is all organised and done for you. You simply enjoy them being in ready to use condition all the time.

 

 

Location, location, location - the importance of apartment location

In Auckland, it is easy to find apartments in prime locations that are close to all the city's best amenities and conveniences. Whether you need to pop over to the grocery store, catch public transit, or enjoy the many restaurants and bars downtown, everything is easily accessible from central apartment buildings. What's more, these centrally-located units often come with perks like parking spots, fitness centers, rooftop decks, and much more. With so many benefits and such convenience, it's no wonder that so many people choose apartments in the heart of Auckland over other housing options. If you are looking for an investment property consider who your renter is likely to be and what will be important to them, eg if there is no carpark - is there somewhere nearby they can park or is there good public transport nearby?
In short, if you're looking for easy access to all the best that this bustling city has to offer, a centrally-located apartment is sure to be the perfect choice for you!

 

Living in an apartment has a lot of benefits - one of which is the cost. Apartments can often be more affordable than houses, and come with all sorts of great amenities that make life easier whether you are an owner occupier or buying an investment property to reap capital growth and rental income. Additionally, apartments are often located in prime areas, meaning you'll have access to more conveniences than you would if you lived in a house. If you're looking for an affordable place to live, don't discount apartments - they may be just what you're looking for!

 

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