All you need to know about buying a unit
The following is an extract from a great feature in the Guardian regarding what you can do to make sure you’re not buying into a strata apartment that’s going to cause you plenty of headaches as well as financial costs and capital losses.
Here are the key points:
- It’s crucial to do your research before buying into a strata or common interest property in Australia as the costs can be significant if you buy into a lemon, potentially including incurring special levies, capital loss, poor lifestyle experiences or worse
- It’s recommended to get a strata inspection report from a professional to find problems such as building defects, litigation issues, special levies that unit owners might be liable for over and above strata fees, and whether there’s enough money in the sink fund to pay for future repairs
- Understand your strata levies/fees, particularly if the building has lots of amenities. Strata fees are generally between about 0.3% and 0.7% of the property’s value, but can be up to 1.2% if it has facilities such as a gym, swimming pool or concierge
- If the building is recently completed or off the plan, check who the developer and builder is and make sure they are still in business. If not this is a major red flag should defects like water damage or cladding arise
- Older buildings can be less defect prone, but often lack the amenities of modern buildings and may require costly maintenance investment to maintain or retrofit improvements. Ask to see the sinking fund and maintenance plan first (a strata report should include this)
- Check whether the building is a major short-stay location (Roost shows Airbnb matches) – a large number of short stay listings on the Web or AirBnB is a sign that your could be buying into a party building
Everything you need to know about buying an apartment: old v new, strata fees, cladding and more.
Most people would probably prefer to buy a house but apartments are cheaper so good bet for those wanting to climb the property ladder
Ask most prospective homeowners and they’ll probably tell you they’d rather buy a house than a unit.
But the financial reality is that apartments are not as expensive so they might be a better bet for people who want to get on to the property ladder. House prices have jumped sharply in Sydney’s inner west, north-west and southern suburbs during the recent market rebound, according to recent figures from Domain, far outstripping units. Median house prices rose 4.8% in the September quarter; units 2.6%.
Units are also more plentiful. On Thursday the research company CoreLogic confirmed there aren’t many houses on the market. Things are better than they were in winter, but in Sydney total listings were still down 23% in November compared with a year ago. In Melbourne they are down 15.7% and in Perth 16.6%. Of the properties available in Sydney and Melbourne, almost half are units: 48.2% and 47.2% respectively.
From freefall to boom: what the hell is happening to Australia’s housing market?
Not surprisingly more people live in apartments than ever before. The 2016 census found about 10% of the population live in a unit. There is one occupied flat for every five houses, compared with seven back in 1991.
So if you’re thinking about taking the plunge in the apartment market but are worried about whether to buy old or new, building quality, cladding, strata or owner corporation fees and even ending up in a block full of Airbnb rentals, what should you look for?
Read the full article here.