There’s a lot to love about apartment living – and no matter whether you’re after the buzz of an inner city lifestyle, taking that first step on the property ladder, or you’re looking to downsize to a low maintenance home, apartments can tick plenty of boxes.
Key points:
- Pros can include better affordability, less maintenance and plenty of amenities.
- Cons can include a smaller living space, more noise and reduced renovation potential.
- Lenders may shy away from certain postcodes where there’s a significant oversupply of apartments.
According to the 2021 Census nearly 2.5 million people live in apartments – and that figure could be set to rise as freestanding houses become less affordable.
But along with the upsides, there can be drawbacks to apartment living. So, it pays to weigh up the pros and cons to be sure apartment living is right for you.
Take a look at our list of pros and cons, plus other factors to consider – including home loans for apartments, before deciding if an apartment suits your lifestyle.
What are the pros of living in an apartment?
Living in an apartment can bring benefits such as better affordability, less maintenance, plenty of amenities, extra security, savings on insurance and greater flexibility to afford to live in a location you prefer.
Affordability
There’s no doubt that apartments can pack plenty of punch when it comes to affordability. That can be very appealing to first home buyers or if you’re on a tight buying budget.
Figures from CoreLogic show that across Australia’s capital cities, the median apartment value in April 2023 was $612,755 – that’s $238,631 less than the median house value of $851,386 across the capital cities.
A saving on the purchase price can bring extra benefits too, such as savings on upfront costs that are linked to the purchase price, such as stamp duty.
Less maintenance
Spending weekends mowing lawns and cleaning out gutters (or paying someone else to do the job) can be so yesterday. Apartment living can cut maintenance costs to near-zero.
Maintenance of the building, gardens and amenities is typically covered and taken care of by either the landlord or the body corporate.
It means more time to enjoy life, less time weeding the driveway, and possible savings on maintenance expenses.
Bear in mind that if you own your apartment you will likely need to contribute towards maintenance costs through strata levies or body corporate fees.
Amenities
Gym? Tick. Pool? Tick. Apartments have come a long way in recent years, and many complexes have all the features you’d expect of a high quality resort including pools, spas, barbecue areas, and of course, well-equipped gyms.
It can see you save on costs like gym membership because chances are, you’ll have one right on your own doorstep.
Security
Our home is a place where we should feel and be safe, and apartment living can really shine on the security front.
Apartments often feature key code entry systems or intercoms that help to prevent intruders entering the building, let alone eyeing off your apartment. Plus other residents are likely to be around to notice any suspicious behaviour.
Location
Choosing an apartment rather than a house can be the key that lets you live exactly where you want to be – whether that’s right opposite the beach, in the heart of the city centre, or 20 storeys above street level basking in bird’s eye views.
Savings on insurance
As an apartment owner you’ll need to take out contents insurance to cover the value of your belongings. But building insurance is organised and paid for by the strata body (or body corporate), which will insure the entire complex, so you won’t have to pay this expense directly.
What are the cons of living in an apartment?
Cons of living in an apartment can include a smaller living space, less privacy, more noise, strata levies and reduced renovation potential.
Compare Home Loans
Smaller living space
According to the latest CommSec Home Size Report, Australian homes – both houses and apartments, have increased in size in recent years. But on average, houses win for square metres.
CommSec found the average new house built in 2019/20 was 235.8 square metres, compared to 136.8 square metres for new apartments.
Of course, this isn’t always a bad thing. Good things come in small packages, right? Smaller size can mean lower energy bills, less housework and savings on furniture. But there are drawbacks too.
You may have limited private outdoor areas in an apartment and less storage space, and it can be a tight squeeze if you have children or are planning a family.
Privacy
We all value privacy, and this is an area where apartment living can mean compromising. Additional facilities you may enjoy such as a pool or gym will be shared with other residents.
Your outside space, such as a balcony, is likely to be right alongside your neighbour’s. So if an element of communal living isn’t for you, an apartment may not be your ideal choice.
Noise
Noise can be a serious issue. It doesn’t just impact our mental health, but it can also affect concentration, which can be an issue if you work from home.
The Australian Government on its Your Home site reports that non-traffic-related noise complaints are rising, particularly in medium and high-density housing areas.
It adds that many new medium and high density developments are unnecessarily noisy, and the sound insulation requirements for multi-unit housing and apartment buildings are not particularly high.
This highlights the need to consider potential noise problems before you buy or rent an apartment. Of course, you can also have noisy neighbours if you buy a house too.
Strata levies
If you buy an apartment, expect to pay quarterly strata levies (or body corporate fees). These cover the cost of maintaining the building and shared facilities such as gardens, pool and lifts, as well as paying for building insurance. As a rule, the more facilities your building has, the higher the strata levies are likely to be.
Less renovation potential
An apartment is part of a larger building, so you simply won’t have the same scope to undertake major renovations that a house offers. Even something as simple as installing downlights can be a problem as it means drilling into the ceiling, which is technically ‘common’ property shared with other owners.
You may have to let the body corporate know about any renovations that involve changes to the exterior of your apartment, or if the work could impact other residents through noise or tradies parking in common areas.
Long story short, if you’re planning on picking up a bargain apartment and adding a personal touch, or adding value through major renovations, you could have less freedom around the improvements than you realise.
What are the home loan options for buying an apartment?
In terms of the home loan process, financing an apartment is typically much the same as securing a loan for a house. The main issues a lender will look at are how much you earn, the size of your deposit and the value of the property.
But if you’re looking for a home loan to buy an apartment there are two potential traps to avoid. The first is that lenders may shy away from certain postcodes, where there is a significant oversupply of apartments.
Banks don’t make these postcodes public, so it can be worth talking to a mortgage broker or local property expert to get a feel for whether the neighbourhood you’re looking at could be a no-go zone for lenders.
The other pitfall is that some lenders won’t provide finance for very small units, often sized below 40 square metres, such as studios. All is not lost though. There are lenders happy to provide a home loan for a studio. It’s all about researching different lenders to find the lender and loan that’s right for you.
Cover image source: KB_3/Shutterstock.com
Thanks for visiting Canstar, Australia’s biggest financial comparison site*
I'm an experienced real estate expert with a deep understanding of the dynamics of apartment living, property values, and the associated financial considerations. My knowledge extends from market trends to the intricacies of home loans, making me well-equipped to analyze the information provided in the article.
Firstly, the article discusses the pros of living in an apartment. Affordability is a key advantage, supported by data from CoreLogic indicating that the median apartment value is significantly lower than that of houses across Australia's capital cities. This affordability appeals to first home buyers and those on a budget, with potential savings on upfront costs like stamp duty.
Another pro highlighted is the reduction in maintenance responsibilities. Apartment living often means the building, gardens, and amenities are managed by either the landlord or the body corporate, translating to minimal maintenance costs for residents. This allows for more leisure time and potential savings on maintenance expenses.
Amenities are also emphasized as a positive aspect of apartment living. Many complexes now offer resort-like facilities such as gyms, pools, and barbecue areas, potentially reducing external costs like gym memberships for residents.
Security is a significant factor discussed in the article. Apartments often feature key code entry systems or intercoms, enhancing safety and discouraging unauthorized access. The presence of other residents in close proximity further contributes to a sense of security.
The article then explores the cons of apartment living. Smaller living spaces, as indicated by the CommSec Home Size Report, can be a drawback, especially for those with families or a desire for more outdoor space. Privacy concerns arise due to shared facilities like pools and gyms, and noise is identified as a potential issue, impacting both mental health and productivity, particularly in high-density housing areas.
Financial considerations, such as strata levies, are discussed as a con. These fees cover building maintenance and shared facilities, and their amount may be influenced by the number of amenities in the building. Additionally, the reduced potential for major renovations is highlighted, as apartments are part of larger buildings and modifications may require approval from the body corporate.
The article concludes by addressing home loan options for buying an apartment. While the home loan process is generally similar to that for houses, potential challenges include lenders avoiding certain postcodes with an oversupply of apartments and some lenders being hesitant to finance very small units, such as studios. The importance of consulting mortgage brokers or local property experts for guidance is emphasized.
In summary, the article provides a comprehensive overview of the pros and cons of apartment living, backed by evidence and data, and offers valuable insights into the financial considerations and potential challenges associated with securing a home loan for an apartment.
