Investing in Strata

A recent article by Monique Sasson Wakelin in the SMH Domain called Investment: What’s best? A house or an apartment? Makes some interesting comments about the benefits of investing in apartments.


Monique focuses on capital growth, reveals that over the last five years some apartment prices in Sydney and Brisbane have grown faster than house prices.


The median price for Brisbane apartments grew by 42.5 per cent while houses grew by 38.2 per cent.


In Sydney, the median price house growth was 30.1 per cent, which was ahead of the median price apartment growth of just 10.5 per cent. But for when we look at inner Sydney apartments price growth was higher 33.6 per cent.


And, in Melbourne, prices growth for houses and apartments was almost dead even at 55.3 per cent and 54.4 per cent respectively.


She concludes that “With a budget of $800,000 or more for a city property, a house is usually the better option. At $700,000 - $800,000, depending on the location, either option will work. Under $700,000, an apartment is usually a better investment.”


I have to agree and add that from a rental income perspective I think strata investment is also better in most cases since –

• the yield is generally higher compared to similarly priced houses (since you buy less house amenity than apartment amenity for the money)
• the operating costs are lower since you own less building and open space
• the operating costs are shared with the other apartment owners lowering them further and supporting you when things are tight
• more ownership costs are likely to be tax deductible since they are included in administrative fund levies

So, see you at the next apartment auction.

Francesco …