Author Topic: House vs Townhouse [Australia]  (Read 3568 times)

Melody

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House vs Townhouse [Australia]
« on: October 18, 2015, 06:28:11 AM »
Would love to hear your thoughts. I am currently house-hunting (for my PPOR) and would love some thoughts on the house vs townhouse debate generally, as well as in my specific circumstances. I have found both a house and a villa (Villa is an Australianism for single level townhouse in a complex) which I like. Both are the same distance from the CBD (7kms) but in different suburbs. Both have similar proximity to other activities I do on a regular basis and friends.

Villa - 2x1, $350k, would rent for $300-$350 a week, difficult to tell as a lot of this stock available so while it "should" fetch the higher price as it's been beautifully renovated (no expenses spared absolutely stunning), there are so many similar units available in this suburb you might need to price low to ensure no vacancies. Small well maintained complex with a pool and reasonable strata fees. Suburb will benefit from future light rail project (if the Govt ever gets their s**t together). Suburb is very suburban but still able to walk to neccessities, it has a small shopping mall nearby, recreation centre, lots of parks etc. Bus route into town. Villa is in direct proximity of a large university which should assume a large tenant demand, however the second bedroom is very small limiting it's market somewhat. There is a lot of this style of housing stock available in this suburb.

House - 3x1 basic budget renovation, very livable but not amazing, small block (no development potential). $430K would rent for $400/week.  Suburb has a train station and up and coming cafe strip (15 mins walk away) and borders the current "hot suburb". It also has a direct bus link into town.  Suburb has a more "urban" feel (with a number of historic houses) and has close proximity to the river. House is in direct proximity of a number of schools. House is close to a large shopping mall and also to a recreation centre and a number of parks.  There are limited SFH <$500k in this suburb.

I have a more than 20% deposit and would be committing less than 25% of my take home pay on either property so cost isn't the primary consideration but rather "personal enjoyment" and "future growth"

All commutes (for Villa and House) are the same length - the train commute involves a lot more walking, though the train itself is pretty quick.  Obviously the more active commute would be preferable, and the trains are more reliable and run later at night, though these days I mostly ride my scooter anyway.

Both suburbs are mixed income though "Villa" probably has a lower median price and bigger range (i.e. One bedroom apartments through to million dollar+++ mansions, though two bedroom villas make up  large portion of the stock. "House" is in a part of the suburb that is primarily SFH, though the suburb has a street which is 2 bedroom apartments. The median price is higher and the range is smaller (i.e. 2 bedroom apartments through to stuff that would just scrape the $1mn mark, most sales are in the $600-$800k range).

I suspect "house" would be the better investment due to being in a funkier neighborhood next to hot neighborhood, though the possible light rail project could really change things for "villa". I personally like "houses" neighborhood more too as it has an urban village feel and being close to the river. However, I am not sure about being a house owner. I am a single female, living alone and am not sure how I feel about coming home to a big empty house. I quite enjoy apartment living (though I really miss having an outdoor space - both Villa and House will give me this) and love having my neighbors close-by... it feels safe and homely. Villa would give me this plus my own outdoor space. I also have no knowledge of home maintenance and taking on an older house is a little scary. I'm also not sure if I want to do boring things like clean gutters and suspect I would outsource these jobs. In villa this is covered by the strata fee. At the same time, Villa feels pretty small, I'm not sure if I'd want to share it if a partner came on the scene and given the size of the second bedroom a house share would not be plausible. I don't really want to house share but the flexibility could be helpful if I were to loose job etc or wanted to really push for ER. The house certainly gives room to grow (but maybe too much room, it easily the size for a small family, and I don't want kids).

Has anyone else made the decision to buy a house when they thought they were more of a Villa/Townhouse person and how did they feel and why? Are you glad you chose the extra space and privacy or do you wish you'd chosen the lower maintenance and cheaper option?

marty998

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Re: House vs Townhouse [Australia]
« Reply #1 on: October 18, 2015, 02:17:27 PM »
Always thought villas were for old people :)

If I were you and looking in Perth I'd almost be tempted to buy a sub-penthouse...

In a beaten down property market there's bound to be a few bargains with ex-mining workers unable to afford their purchases made in better times.

I'm also not sure if I want to do boring things like clean gutters and suspect I would outsource these jobs.

Cleaning leaves out of the gutters is the easy bit, mesh wire covers help a bit too.

It's not in you either/or comparison, but my tip would be for a 3 bed villa - resell value after potential reno would be better than a 2 bed - especially since your going to be paying a top price for a fully renovated one.

As you say a house would probably go up in value more, but yes there would be much higher maintenance, and potentially land tax if you rent it out down the line.

Melody

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Re: House vs Townhouse [Australia]
« Reply #2 on: October 18, 2015, 04:41:51 PM »
Sub pent houses are still really expensive. Even a basic city apartment is in the 400ks and doesn't have an outdoor area.
I don't have a lot of requirements (sunny, arty, large enough space to entertain and good indoor/outdoor flow) but some sort of courtyard or terrace is one of them.

Interestingly they are not asking "top price" for this villa, it's $10k or so more than a basic one, and $20k more than a "renovators delight". A three bed in the "villa" area would go for at least as much as house, because of it's rarity factor in the neighborhood. The number of bedrooms isn't the issue, more the size of the second bedroom/rooms which a three bed villa doesn't solve.  (If house had one less bedroom it would be "perfect" sized in my mind.) Given all the villas in the area were built in the 1970s they pretty much all suffer from small second bedroom syndrome.

House neighborhood only has villas built in the 80s (ugh) so if I live in this area I have to buy a house.
Villa neighborhood does not have any two (or three) bed houses in my price range. 

Other options would be come in one area closer and pay house price for a (2 bed) villa (area has a lot of villas/apartments and is the current "hot suburb" having already experienced a lot of growth, less potential upside here IMHO, but a really cool area to live in). Or come to the cool inner city suburbs (equivalent of Fitzroy) where $430 buys very little, but this would be the best area to live in.

Anatidae V

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Re: House vs Townhouse [Australia]
« Reply #3 on: October 18, 2015, 05:42:46 PM »
I think the flexibility might be better as a more expensive house where you can fit a housemate at $100-$200/week would lower the "cost" of the house a lot, and would allow you to have a bit more of the company you're after. If you ask around about what the normal maintenance over a year on a house is, could you work out how much you could do yourself and how much would be outsourced? Then you can compare more easily to the strata fees/ease of not doing it yourself.

I have also noticed the huge number of 70's places for sale, and now I know what I'm looking at they are everywhere - was there a housing boom at that time?

stripey

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Re: House vs Townhouse [Australia]
« Reply #4 on: October 18, 2015, 10:24:25 PM »
Spoke to BF- yes there was a housing boom in the 70s. He's of the opinion that mining/resources booms come around in a 30-year cycle in WA, which would nearly match up (if the boom ended in, say, 2012),

I'm not looking to purchase at the moment, but can talk about the female- living-alone-coming-home-to-a-house thing.

At least for me, the size of the house doesn't contribute to feeling more or less alone when coming home. I'm in an older 3x1 house (small-ish, though) on a quarter-acre block. What I can say, though, it that it's much easier to invite lots of people around and play the host in this house with minimal effort so maybe all up I feel less alone? Or something like that. I certainly host more than I ever thought I would since moving here. Possibly it's easier to host because I've decluttered to the point where cleaning up and tidying is less effort though.

Due to my private rental arrangement I do a lot more house maintenance than the average tenant (I've been told to treat the place as my own, and in many ways I do). Unless you're in the situation I was, where the gutters had been neglected for so many years that the grass that was growing in them was actually rootbound in the downpipes (!), that gutters aren't really much of a hassle :)

My $0.02. hope it's useful.

Anyways there's my $0.02

potm

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Re: House vs Townhouse [Australia]
« Reply #5 on: October 19, 2015, 01:32:18 AM »
Are you planning to rent out some rooms to others?
A 3br house seems like a whole lot of house just for you.
Sounds like you are in a good position to afford it but this is mmm forums so it's worth considering what the extra cost will mean for you.
I think you have to consider the decision overall with what your priorities are in life. There's always tradeoffs so it's not easy.

Melody

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Re: House vs Townhouse [Australia]
« Reply #6 on: October 19, 2015, 06:59:20 AM »
I wouldn't plan to rent rooms out (hence the concern of living alone) but if I were to loose my job the rent on two rooms would let me keep up with the mortgage payments if the bank were to let me switch to interest only (an option with the loan I am looking at). I'd also seriously consider air bnb but not sure what the demand would be given how far out it is from the city.

I totally don't need a house (currently live in 36sqm one bed apartment) however feel the house would be better from an investment perspective (tax free investment) and has a larger potential pool of possible renters (important as I will likely go somewhere else for a few years at some point before returning to Perth eventually.) [My ideal dwelling is a terrace house or a warehouse apartment, but those are only available in super fancy areas... failing that a small 2 bed house or a large 2 bed villa would be ideal.]

What I am struggling to quantify is the maintenance cost (older style brick veneer, visually in good shape) to calculate this against strata to determine the ongoing costs... any hints?

Rel

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Re: House vs Townhouse [Australia]
« Reply #7 on: October 20, 2015, 02:08:33 AM »
Quote
I totally don't need a house (currently live in 36sqm one bed apartment) however feel the house would be better from an investment perspective (tax free investment) and has a larger potential pool of possible renters (important as I will likely go somewhere else for a few years at some point before returning to Perth eventually.)

Is there a reason why you are keen on buying real estate now, rather than in the future when you return to Perth? My understanding is that the share market generally offers better investment returns than real estate, as well as having more flexibility (it's basically no effort to manage shares so it'll be much less of a hassle if you go overseas, plus you can sell them off in small sections rather than having to sell the whole batch at once as with a house).

Astatine

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Re: House vs Townhouse [Australia]
« Reply #8 on: October 20, 2015, 03:35:30 AM »
I'm on the other side of the country. I bought a 2 bedroom 1970s townhouse about 5 years ago. I bought when I'd just met DH but wasn't completely sure it was a LTR at that stage and wanted to make sure I could make the payments on 1 income. Our suburb isn't "hot" (which is why I could afford to buy it) but what mattered to me was easy access to public transport and close-ish to shops.

Anyway, our 2 bedroom place (about 70 square metres and a small front and backyard) is fine for the two of us plus two indoor cats. Even with DH's packrat tendencies. I occasionally wish we had a bigger yard for gardening but the size of our place is fine. We have a large combined loungeroom/dining area which really helps with the house feeling more spacious than it is and we can comfortably host 20 people in the space. But we're somewhat antisocial introverts so that doesn't happen very often. :)

agent_clone

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Re: House vs Townhouse [Australia]
« Reply #9 on: October 20, 2015, 03:49:04 AM »
As a personal thing, I would choose the house over the villa if the villa has strata/body corporate.  Body corporate was something that I was trying to avoid when purchasing...

I could be wrong, but I think the main the major expenses for house maintenance tend to be the Bathroom, Kitchen and Roof.  Plumbing may be paid for by strata (depending on the issue), but actual renovations of the bathroom or kitchen would be paid for by you.

My parents have a 1960's house and i think the main things that they have done since they purchased it in the 1980's is renovation of the kitchen soon after they moved in (old layout was an issue), redid the sunroom, new windows (the old alluminium windows needed replacing, they installed double glazing), installation of an evaporative cooling system, renovation of the laundry and two bathrooms (laundry and one bathroom were done for functional/beautification purposes, the other bathroom the tiles were falling off in the shower), they also have to periodically replace one of the toilets due to the plumbing location or some such.  They have also painted the place a couple of times (at least some rooms), and re-carpeted. They also have a Plain Tree in the backyard that occassionally needs lopping because of potential interference with power lines, and they redid the paving around the washing line in the backyard.  I'm not sure if this helps with working out how much maintenance there may or may not be, keep in mind that this has been over the period of a bit over 30 years?  I don't think most of these would be covered by Strata either (except for the windows, and tree).

alsoknownasDean

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Re: House vs Townhouse [Australia]
« Reply #10 on: December 28, 2015, 06:18:21 AM »
Are you sure there'd be no development potential on the house block?

I'm thinking about the same decision in about 18 months and have decided on villa because house would mean I'd move an additional couple of suburbs from the city (and I'm already looking in the 12-15km range), or spending another $150-200K.

The house might see more capital growth, if it's low priced for the area, especially as people are priced out of the 'hot suburb'.

Ultimately it's a lifestyle choice. There's nothing stopping you selling up and buying something else if circumstances change :)

nnls

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Re: House vs Townhouse [Australia]
« Reply #11 on: December 28, 2015, 04:23:05 PM »
As a personal thing, I would choose the house over the villa if the villa has strata/body corporate.  Body corporate was something that I was trying to avoid when purchasing...



I agree with this, body corporate can be annoying. I currently live in a villa, and although its not too bad its annoying having extra payments for things like painting or gardening that I could do myself for cheaper.