Question
All we can afford for our first home is a unit, but since we plan on having children soon should we wait until we can afford a house?
Answer
Traditionally the expectation when we have children is that we'll pick up and move to a quarter-acre block in the 'burbs.
I don't need psychic powers to predict what your well-meaning relatives will be saying when you announce your pregnancy: ''So… when are you buying a house? You'll need a big backyard – the kids will need somewhere to run!''
They might even be sending you listings of houses for sale that would ''be just perfect for you''.
But you should block all this out, because the times they are a-changin', as Bob Dylan once sang, and you should get on board.
What I'm talking about is a move towards apartment living for families driven by both affordability and lifestyle.
As well as being cheaper than houses, apartments are usually close to an abundance of amenity including public transport, parks, childcare and schools, and they're often closer to employment, too, reducing the daily commute and allowing for more quality time with our loved ones.
So what you potentially lose in space with a unit (and I say potentially, since many houses aren't much bigger than units anyway), you'll gain in other benefits – and your kids will have many other places to roam outside of the home.
In response to the growing demand from families, unit developers are building bigger homes specifically for owner-occupiers. So if all you can afford is an apartment, if your budget can stretch to a three-bedroom apartment with a little more space (and good storage) it could actually be a great option.
It doesn't even have to be in the inner city, if your budget can't stretch far enough. There are plenty of high-density areas around our major cities with access to amenity. Indeed this is a key part of planning, with more and more people likely to be living in units in the future, just as they do in many overseas countries.
If an apartment lifestyle is not what you pictured for your family the next best alternative is to find an area where you can afford to buy a house.
You might baulk at the idea, but some people are moving to regional areas that offer a great lifestyle but have more affordable housing.
While you could buy an apartment now and sell it in a few years – when the fit becomes too snug – to buy a house, the reality is that even if your unit experiences significant value growth, buying and selling costs will likely cancel out any profit, leaving you back at your starting point.
You could also, as you suggest, wait until you can afford a house, but, realistically, when will that be? Prices are continuing to rise and with kids on the way you'll have more financial responsibilities and a potentially lower income, so it's unlikely you'll be able to scrape together the extra money required in the next few years, unless you're on great incomes, you're great savers and perhaps could even hold off on kids for just a few more years?
Getting into the market in some way, shape or form should take priority, before you're priced out entirely.
Since property is generally a long-term proposition due to the costs involved, if you buy an apartment now you could consider trading it in for a house in, say, 10 years' time, when hopefully you've seen enough value growth to justify the transactional costs and your kids are old enough to require more privacy.
No matter what your choice, kudos to you for considering your future carefully rather than rushing out to buy and having second thoughts later.
Future proofing is key in any financial decision, and especially for the huge outlay required for property.
This article first appeared on Domain.