Large apartment blocks have become increasingly popular in the past decade, and there are lots more in the pipeline. According to the Australian Bureau of Statistics, approvals for buildings of four storeys or higher have been running at very high levels recently, and were particularly strong in the second half of last year. In March 2014 the running annual total for approvals was more than 188,000, the highest since 1995.
What makes buying an apartment in one of these large-scale developments different to buying any other apartment? We take a look.
Good facilities are among the attractions of large apartment blocks.
Gyms, swimming pools, concierge services and communal gardens could improve your lifestyle and save you money on items such as fitness club memberships.
Location also often makes large apartment blocks attractive. Many apartment blocks are located close to top amenities. This can be great for your lifestyle (or the lifestyle of your tenants if you’re an investor), offering an easy commute to work, good access to public transport (which can be cheaper than running a car) and many entertainment venues could be within easy reach.
Although good facilities and a location can be great for your lifestyle, you should consider the other costs associated with buying into a large apartment building.
Body corporate (also known as owners corporation) fees may apply in buildings with lots of facilities. You may also have to contribute to sinking funds, which are essentially savings for future building repairs. Be sure to factor these costs into your budget.
An advantage of body corporate fees is that they generally include building insurance, so you might not have to take out a separate policy.
Low maintenance costs
Buying in a large new building means the fixtures and fittings should be modern, undamaged, and spick and span. Maintenance issues are expected to be minimal, so it is unlikely you will incur any major repair costs in the near future.
Applying for a home loan to buy a unit in a large apartment building is usually the same as applying for a regular home loan. The apartment buying process may not be different to that of buying a house. We can give you conditional pre-approval so you can move quickly and with confidence when you find the perfect apartment
Some banks may have separate rules for off-the-plan apartment purchases. Check out our article on the different financing considerations when buying off the plan here
Buying off the plan
Buying off the plan in an apartment block that is yet to be constructed offers potential advantages, such as buying at a low price well before construction is finished. Hopefully, the value of the apartment will rise between signing a contract and the completion of construction.
As with all purchases, make sure to do your research before committing.
As well as possible stamp duty exemptions, new buildings, and high-rise buildings, can also offer depreciation tax benefits. Talk to your accountant or financial planner for more information, or visit the ATO website.
Oversupply of apartments
If you’re an investor, a unit in a brand new building should be attractive to tenants. However, something to keep in mind is that there is the potential for an oversupply of units in a suburb or city.
If lots of apartments were to become available at once, this could result in a decrease of property values and rents. It may also make it harder to find a tenant if you are an investor, or a buyer when it comes time to sell.
Do your research
Whether you’re a first homebuyer or an investor with a large portfolio, it’s essential to do research before buying property. Evaluate the area, research the developer, check you are paying a fair price, obtain finance, and, if you are an investor, determine whether there will be rental demand for the property.
An optional strata report will provide information about the health of the building, and the strata scheme’s regulations and finances.It’s a good idea to engage a solicitor to look at a contract before you sign.
Thinking about buying into a large apartment development? Speak to one of our lending specialists today.