Apartment or Unit?

July 2, 2019

There are many similarities between apartments and units and it is important to deconstruct the differences when determining which to purchase, each with their own advantages and disadvantages.

Apartments

• Generally more modern and in a newer complex, possibly a high rise, with more features e.g. gym or pool
• Generally on a stratum in freehold title with a bodycorp. Some apartments on a stratum in leasehold title which your solicitor will be able to advise you on
• Generally come with limited carparks, sometimes none in the central city
• Generally lower maintenance with limited outdoor areas
• Apartments generally yield a higher rental return of 7-8%

Units

• Generally original fixtures and fittings and most are built prior to 1990
• Some units have been renovated although it is generally older units on the market
• Units could be on a unit title with bodycorp or on a cross-lease title without bodycorp
• Generally have more form of ownership as most units are on a cross-lease title
• First home buyers generally prefer to go for units especially in South Auckland as they are deemed more affordable
• Units generally yield a lower rental return of 4-5%
• Generally more change to increase the value of the property through capital gains

There are different ideologies when choosing to buy an apartment unit. If this is your first home or you are looking to take a step on the property ladder, which you are wanting to sell in the next few years by generating equity, I would suggest going for a unit. Apartments have a higher ROI of 7-8% but provide limited capital gains. Units have a lower ROI of 4-5% but provide ample opportunity for significantly higher capital gains than that of an apartment.