What to consider when comparing inner-city units with outer-suburb houses

As an owner-occupier, any purchase should be made in a location you want to live but clearly decisions are also driven by affordability.

If you are torn between the lifestyle each location offers, ultimately you’ll be contemplating the lengthy commute versus the size of the home afforded in each locale.

Growth vs. yield

There is one rule of thumb when it comes to deciding between a house and apartment: growth and yield.

Apartments tend to generate better rental yields, and investors looking for that high yield rather than capital growth tend to opt for high-rise.

Sydney’s rental yields were 3.23 per cent for a house and 3.94 per cent for a unit during the June quarter, according to Domain data.

Comparatively, houses tend to command better long-term capital growth, and for an owner-occupier this is the ideal scenario.

Capital growth equals greater equity in the long-run, which will help a leg-up the property ladder at a later date. It is the land component of a house purchase that boosts the long-term capital growth over time.

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Apartments vs. houses

Choosing between an apartment and a house depends on the lifestyle you wish to lead. Photo: Louise Kennerley

Strata fees come hand-in-hand with apartment living. The additional charge is designed to cover the maintenance and common services equally across all residents.

By contrast, buying a detached house means all maintenance cost lies firmly on the homeowner. Non-essential maintenance to a certain degree can be delayed, unlike strata fees that have to be paid regularly and not deferred.

Houses require hours of maintenance: there are lawns to be mowed, windows and gutters to be cleaned, and of course, more rooms to be maintained. DIY enthusiasts will relish spending the weekend tinkering around their home, while others will see these tasks as menial chores.

A major drawcard of apartment living is the proximity to amenities and transport, as well as the inclusions offered in many developments, ranging from a pool and gym, to tennis court and gardens.

Owning a house offers greater flexibility with no strata laws. Homeowners can renovate, upgrade or extend when budget allows, obviously dependent upon council and building regulations.

Knowing your needs

The choice to buy an apartment in the CBD or a house in the outer suburbs should suit your own personal needs.

Consider the future and plan ahead – this should guide your decision.

Is a third bedroom, man cave or second bathroom mandatory? If so, then prepare yourself for a lengthy work commute. On weekends it will be worthwhile when enjoying the added space a house offers compared to an apartment.

Dr Nicola Powell is a data scientist at Domain Group. Tweet your questions to @DocNicolaPowell