I was recently staying in Brisbane visiting clients recently and the hotel which I was staying at had sensational views across the river and out to the mountains. However, as I was staring out to the vista, I started to thinking about the below questions….
“What is more important when buying property – the square metres of the apartment or building, or thinking about the land content of the what you are purchasing?”
Upon my return back to Melbourne as I crossed the Bolte Bridge, I noticed the skyline full of cranes. With all the building of high rise apartments going on, it did start me thinking a little further about this notion of land content.
“The traditional premises when thinking about property, has always been that land prices historically appreciates and a building or structure always depreciates.” If this is true, which is more valuable then and which one should you focus more on when looking for property?
The question becomes I think even more critical when you are looking at a high rise block like the one I was staying at in Brisbane. You might have a land size which the building sits on of say 1,000 or 2,000 square metres with a building of say 100-200 apartments on this land size. What is the actual land content which you own, and what is the building or structure which you own?
When most people are shopping around for their apartment they think about the size of the apartment is it 50, 70m2 etc. The new developers have even been quiet tricky when they reduce the size of a 2 bedroom into a foot print of a 1 bedroom, but keep the same number of rooms. This allows them to squeeze out even more profit out of each project. In the case of building bigger buildings, this also tends to mean less land content.
Does this mean that when you are shopping around for your apartment should you be focused not only on the square meters of the apartment which you are acquiring, but also the land content which you actually own as part of the complex?
In Melbourne, with the large number of high rise building being built, it will be interesting to see this variable between square meters, number of rooms and land content play out.
The argument can also be extended when you are considering the pros and cons with an apartment to a house for which one is better? Then you overlay new building versus old buildings, the impact of views of a high rise, location etc and the argument gets even more complex.
Like most things about property there is simply not an easy answer. It is a careful balancing act and you need to consider each element when analysing your affordability levels, budget and overall financial goals and objectives.
With all financial planning ideas too, it is important to seek professional guidance to assist in constructing a map with a robust strategy to ensure you are in line with your other financial goals and objectives. We of course would always recommend our team at AJ Financial Planning!