Strata vs House — Making the Right Call

The majority of investment-grade apartment buying advice in Australia has been wrong. Off-the-plan apartments purchased in 2012–2017 in Brisbane, Sydney, and Melbourne have, in many cases, delivered negative or flat capital growth while charging significant body corporate fees. This isn't a coincidence — it's structural. Apartments depreciate because the building ages. In a strata scheme, you own a proportion of a building and land, but mostly a building. Buildings require ongoing maintenance, and special levies can appear suddenly — $10,000–$50,000 assessments for fire safety upgrades, waterproofing, or structural repairs. Brisbane apartments built before 2000 have significant exposure to concrete cancer and waterproofing failures. The oversupply problem is also significant: Brisbane's inner-city apartment market saw massive overbuilding between 2012 and 2020. There are suburbs (Newstead, South Brisbane, Woolloongabba) where supply is still being absorbed. Buying into a building with many investor-owned units means high vacancy rates, downward pressure on rents, and weak body corporates.

Not all strata is equal. Townhouses and boutique complexes (under 20 units) in desirable locations can perform well because they combine some land component with lower body corporate costs and higher owner-occupier ratios. An owner-occupier-heavy body corporate is far better managed than an investor-heavy one. The yield advantage of apartments is real — in some Brisbane suburbs, a $650,000 apartment yields 4.5% vs. a $900,000 house at 3%. But factor in body corporate fees ($3,000–$8,000/year), sinking fund levies, and slower capital growth, and the net advantage often disappears. If you're buying strata, focus on: low-rise (2–3 storeys), small complexes (8–20 units), high owner-occupier ratio, strong sinking fund balance (request the body corporate financials and AGM minutes from the last 3 years), and no known major defects. Never buy off-the-plan for investment unless you have a specific arbitrage reason (e.g., stamp duty savings for owner-occupiers).