The advantages and disadvantages of the three housing types in Australia

Many buyers don't know much about the Australian real estate market, and they don't know what kinds of real estate there are in Australia, what are the differences between them, and what are their advantages and disadvantages. Some buyers prefer apartments, some prefer townhouses, while others only prefer single-family villas with lands.  Compared with the land use right of 70 years in China, the lands and the various types of real estate in Australia are permanent properties (except some projects have 99-year property rights, most of the projects are permanent properties), and this property can be handed down from generation to generation as fixed assets which are more valuable, and so far, Australia still has no inheritance tax. Besides, there are many differences of housing types between Australia and China. We have talked to you about the purchase process in Australia and China before, and today we will explain three main types in Australia in detail: the advantages and disadvantages of House, Townhouse or Apartment, to help you learn more about the Australian property market, and choose the most suitable homes based on your needs.

House

A House is a villa that has a house and a yard of its own. No matter it is the house with one or two floors, the biggest characteristic of the house is its large size, spacious activity space. Most of the houses have more than three rooms, so if you want to live in a livelier house, it is more appropriate to choose a house with more people living in. Each house is built independently, and the styles can be various, depending on your hobbies.

House:Camelot, Commera $469,860起

Townhouse

The original construction method of Townhouse is a whole row of houses next to each other. According to the demand of the market, the type with 3 units together has generally emerged, there is also a room type with double construction, that is, two get together to share a house wall, then some townhouses are transformed into independent houses with its own small courtyard. There are even mini houses (small single-family villas) with the small plots of land under personal name. In Australia, the biggest characteristic of townhouse is that the general design is two floors, the first floor is the kitchen, the toilet, the garage and so on, and the second floor is the bedroom. Most townhouses have small gardens. In general, the total area and land area of townhouse are smaller than that of house.

Townhouse: VUE, Robina, $599,000起

Apartment

Apartment building usually refers to units. It's basically going to be more than three floors, one or more units per building, and one stairway per unit. According to Australian regulations, elevators must be installed above the third floor. Most of them will be equipped with community swimming pools and gyms, and some communities have tennis courts and even mah-jongg rooms. Most of the units of apartments are equipped with anti-theft facilities and need to be entered by swiping cards. They are also located in convenient places for transportation, but the general management fee will not be too cheap. However, apartment is popular among investors because it is easy to rent.

Apartment: Cambridge Residences, Robina, $330,000起

House, townhouse or apartment has its own supporters. Finding a suitable room should consider both their respective characteristics and your own needs to achieve the highest asset value and return. Next, we will analyze the advantages and disadvantages of Australian houses, townhouses and apartments from seven perspectives.

1.Location and facilities

In terms of the distance to the downtown, apartment is usually located in places with dense population, near downtown, many of them are in prime locations with completing business and education facilities and convenient transportation,  preferred by single white-collar workers, young married couple and international students. Houses and townhouses are usually 5-30 km away from downtown with completing supporting facilities (business, health care, education, transportation, etc.), some townhouse communities also have swimming pools, gyms and other public facilities, Australia's residents and families with children would choose these two types.

2.Capital appreciation

As the market develops, the land will be less and less, and the land will appreciate faster than the building, while the house covers a larger area, so the appreciation space is larger. According to different regions, the prices of apartments in some areas grow by 6-8% per year on average, while that of villas grow by 10-12%. However, the location of houses and the future development potential are important factors to improve the property value, and the apartments in the prime areas also appreciate rapidly. In the same location, because land value of house is higher than that of apartments and townhouses (generally higher than 40%), and the long-term supply quantity is lower than the apartment again, capital appreciation of house is higher than that of apartment. In general, because of the permanent ownership of land, appreciation of house is faster, and the relative appreciation of townhouses and apartments belong to medium level.

3.Investment costs

In terms of housing prices alone, it is hard to identify the cost of investment. For example, the price of a two-bedroom apartment (75 square meters) in the heart of gold coast approximately equals to that of a house with 400 square meters, 20 kilometers away from downtown. So it's hard to say which of these houses is more expensive, but under the same location and conditions, the value of villas is much higher than that of apartments and townhouses. In terms of other expenses, the apartment and some townhouses need to pay the property management fee every year, while the villa does not need to pay, but the owners have the responsibilities to manage their own gardens and weed the gardens regularly.

4.The rental return

Because of the location and supporting facilities of the apartment, the rent is higher than that of the house. In most cases, the house is in places far away from the transportation, shopping centers, schools, and health care centers, and part of the houses are broken, thus the rents are lower, and they are difficult to rent out, even the new house is usually very far from the downtown area. Apartment, by contrast, is close to these facilities, and it is not surprising that apartment rental rate is high and the rent is high. And most of the apartments have free swimming pools, gyms, barbecue areas and recreational facilities in their own buildings.

The annual average rental return of house is between 2.5% and 3%, and the annual average rental return of apartment is between 5% and 7%. Choosing house as an investment can greatly reduce the cash flow of investors, influencing investment ability and reinvestment ability. People who invest in house have relatively large cash flow pressure at ordinary times. For investors who do not have enough cash flow, choosing house for investment will greatly affect their normal life. And in reality, apartments in the same area are generally closer to public transportation, shopping center and other infrastructure, and the ratio of house rent to total house price is relatively higher.

In the case of limited income of investors, a high ratio of house rent to total house price means that higher rental income is more likely to support higher loans with better cash flow. Apartment can take back the gains more through negative deductions, and also bring better cash flow. This is because the building price ratio of the apartment is higher than that of the house, the depreciation ratio is also higher (because the land with a high price ratio for the house is not depreciated), and more tax can be collected through negative deductions. Thus, in terms of cash flow, apartments are better than houses.

5.Body corporate vs stamp duty

Many investors reflect that high property costs and rising prices for apartments over the years have put enormous pressure on their cash flow. You don't have to pay that much for the house. In fact, buying a house for investment does not need to spend too much body corporate to others, but has to face high stamp duties. For overseas buyers who buy houses in Queensland, as long as the land value is more than 350 thousand Australian dollars, they will pay an additional 1.7% of the land price each year as the stamp duty.

6. House for sale and settlement

The settlement of apartments is usually for 2-3 years; The settlement of house is for about 1 year, which is shorter. In terms of sale, according to Australian law, second-hand housing can only be sold to Australian (citizens or residents with permanent rights) or people hold student visa and work visa. And the family with many members will choose the house, and the locations are usually with beautiful environment and complete equipment, and away from the crowded regions; If the family population is small, for the convenience of work and life, they will choose an apartment.

7. Safety

Compared with apartment, the security of the house is slightly poor, especially the Chinese community in Brisbane where the security is not very good, a lot of people know that Chinese people are rich, and the house is very easy to enter, so people who live there themselves or neighbors had stolen experiences more or less. If you are living in houses, it is better to keep two dogs.

For townhouse, most of the townhouses have gates, some even have security, but there are some townhouses neither with gates nor security.

Finally talk about the safety of the apartment, each building has 24-hour reception in the building, security personnel, and the key point is that elevators can be used by swiping the cards, and only residents living in the apartment will hold the card, and each floor corridor has cameras, which makes the risk of stolen and robbed almost to zero.