I am upgrading and buying a place to live in - Free standing townhouse or wait for a house?

Hello I am new to PropertyChat and I have looked at a few old threads on Townhouse vs house. However I am not investing, I am buying a place to live in. I have some questions and I would appreciate some advice.

Background:

Currently I own and live in a 2 bedroom unit in Sydney's upper North Shore, it is a 40+ year old block. The market has come down in the last 18 months and now it is going back up so I am using this opportunity to upgrade.

Initially I wanted to buy a freestanding house but after 10 months search I haven't found a suitable home. Now the price is rebounding quickly and I am getting priced out again, because even though I am upgrading but the prices of houses are gaining more than my unit. This is why I began to consider townhouses, in the same suburb to where I am living.

Where I am at:

This week I put in an offer for a townhouse and it was accepted. I haven't signed the contract yet.

The townhouse is freestanding, 3 bedrooms, full brick, 25 years old. It has 140sqm building area allocated with 320sqm land. 1.5k from the shopping centre and 2k from train station. It is not easy to find a freestanding townhouse on 300+sqm land. It is almost like a house anyway. The location is also good. There are about 30 townhouses in the complex. It is in the same suburb to where I am currently living and the price is about 80k lower than a 3 bedroom fibro/timber/500sqm house in the same area.

However the strata for this townhouse is 1100pq (including water), and they are currently taking special levy so it is 1400pq because they are doing a project to paint the exteriors for every townhouse in the block, it is a very large block, the total land area is almost 20,000 sqm. They have a common playground and barbeque area (no swimming pool).

I am not a property investor, my plan is buying a home to live in for long term, for decades to come.

I understand that if I buy a house then while there is no strata but I will have to pay for building insurance and any maintenance/repair myself. I found the below web article, and I worked out even after I removed several repair items such as damp repair and gardening, to live in a house the maintenance/repair is still around 4000 per year (on 5 year total). From my research, building insurance for a 3 bed house is about 1000 per year. So the total upkeep will be approximately $5000, per year, for owning a house. Will you say this a good estimate?

The web article is here (Retirement Community News — Melbourne Retirement Communities).

So my questions are:

1) Should I pull the trigger and buy this townhouse? Or should I wait for new listings of houses to come on the market? My concern is we are already mid October and this Spring hasn't seen many new listings and the prices in Sydney are rebounding very quickly, it went up 4.6% in 4 months. And in the area I am looking to buy the prices are reflecting the recovery trend. Right now I can spend an additional 80k to buy a house, but my concern is if I wait another 2 or 3 months the prices might go up further and move beyond my reach. So the alternative is buying this townhouse, but the strata is pretty expensive.

2) The estimate for house maintenance/repair/insurance (yearly average based on 5 years total), is $5000 per year. Based on this estimate, then if my plan is to live in the property for 20 years then the upkeep cost for a house is almost the same as the strata fees! I never owned a house before and most of my friends who own houses don't keep records, but they did tell me once a few years they have to fork out tens and thousands of dollars for major repairs. Do you think an estimate of 5000 dollars yearly average for upkeep + insurance for a house is a good estimate?

Thank you.

 

Just because you plan on living there forever doesnt mean you will.

There has to be some consideration for long term growth prospects here. For most people, the ppor is the retirement fund and the helping the kids buy a place.

Did you consider that a downturn is when you should be upgrading, and not an upturn?

Esp given that (small) price difference, objectively the fibro with land would rise more long term, just on the land content alone. But there are lots of possibilities. Eg moving to the next (cheaper) suburb. The problem with strata is that you cant control it.

Townhouse without pool/lifts is ok, but you are more in control with a house. You can choose how and when to fix. Townhouse you have to pay to maintain the driveway even if you drive a vespa and your neighbour a hummer.

Look most of your post is emotional and based on lack of experience. The upkeep on a house benefits you and you only. The use/damage and upkeep on strata is shared. Having owned both, experience says the house should be cheaper IF no structural issues.

 

We must have been lucky - we owned units in two complexes with no issues with BC, on the contrary, both were keen to maintain the properties well, as well as instigate improvements. One was in a block of 8, one in a complex of 80!

I would guess your townhouse complex has an on-site manager. With only 30 in the complex, the manager’s salary will account for the major expense.

You may find better value in a smaller complex with no on-site manager, or a larger complex where the cost is spread over more owners.

 

"Did you consider that a downturn is when you should be upgrading, and not an upturn?"

Yep, that's is why I started looking back at the beginning of the year, when it was approaching the bottom. However at the time not many people were selling, so most houses were either in bad locations or terrible conditions. Then starting from June they started cutting the interest rates and also APRA released the lending standard, then the market suddenly went from downturn to boom in a period of 2-3 months!

And now the house prices are going up 1.9% per month I am concerned the prices will move beyond my ability soon.

Furthermore the listings are so low, so I haven't seen houses within my budget. I know there are 3 bedroom houses I can afford, but the owners are not selling them because it looks like people are waiting for the prices to go back to 2017 level.

Another possibility is staying where I am and wait for the next downturn, but from what we've seen this government will do everything in their power to jack up the property price in the foreseeable future, because they are using housing price as a leverage to make up for the slowing economy. Admittedly what I am saying here is FOMO, I used to think those people who bought in upturn market were stupid but now I am in the similar predicament I can understand the pains of first home buyers

 

Are you looking for analysis, or sympathy?

No one knows what will happen. Your existing place would also have gone up, yes? Feel for those who dont own.

 

Looking for analysis by providing a background to the situation.

If you are not interested then I am totally fine. But please don't be condescending.

 

If prices fell again, will you act quickly and upgrade, or just think wait a little longer so i can afford a better place?

Remember you would just have seen a downturn with low stock, then an upturn, then a downturn again.

 

What do you intend to do with the current ppor ?

Buy a house, get a long settlement.

Figures for maintenance are based on Joe average who paints every 8 years and has a nice garden (you don't have to spend that, and plenty don't )

Buy the right house and your maintenance cost will be way less than strata (brick with aluminum windows)

 

The estimate of 5k per year include repair/maintenance + home building insurance. (i.e. a total of $20k for maintenance/repair in 5 years, so $4k per year. But the home building insurance is roughly $1k per year, adding up to a total is $5k per year). Does this sound right to you?

 

Rates are payable whether house or townhouse, and probably not much different.

 

Trust this helps.....
Where we own in Moreton Bay, QLD, the rates, insurance and water comes to somewhere between $4k and $5 per annum per property. Any maintenance is on top of that. We own a townhouse right next to the beach and two family homes in middle class suburbs. Strata fees for the TH is $250 per quarter in a 30 year old complex of 5. Our BC is awesome, and these fees are much lower than typical fees. The BC fees approx = building insurance on a house and they get termite inspections and check the roof regularly too. Separate from the BC, some years we spend nothing on maintenance, other years it might be about $2k per property. Average $1k per annum per property. I have been slowly updating whenever "maintenance " is required , eg when the blinds on the balcony doorway fell apart, I updated all the blinds in the TH to ensure they all match.