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Buy a house or apartment in Cyprus?
Are you in the market for buying a property to house you and your family, invest, or just want to learn a few things about the current trends?
In this article we examine the major pros and cons of buying a House vs buying an apartment while you can also get updated on the current market.
First and foremost, what do you want? It all comes down to each person’s different needs, lifestyle and desires. To elaborate on the matter, just think of the future and visualize where you see yourself living. Would you see yourself living in a House or an Apartment? Although the answer to this question appears to be an easy one, it is never as simple as one might think.
A house is not always the better and most expensive option!
Did you know that the cost of apartments in Cyprus in some cases is comparable to buying a house?
Now that we have your attention…
Here are the key benefits of buying a house vs buying an apartment:
Build equity
The past has shown that prices for houses tend to go up since land becomes more and more scarce and on a macroeconomic level, ceteris paribus (considering all other things remain equal), you should expect your house price to increase. While making loan payments to your bank and/or if the value of your property goes up, you achieve equity. The difference between what you owe your bank and what your house is worth, the more equity you have.
Safer investment
Unlike any other type of investment, buying a house is most probably the only investment banks are willing and eager to loan out their money. Not forex investment, not business investments. This alone speaks volumes as to how safe of an investment property buying actually is.
Pride of ownership
There is nothing better than the feeling of owing your own house. You can do whatever you want like without the limitations that apartment owners have. For example, making house improvements or even having pets without having to explain yourself to the rest of the apartment owners. This is one of the most important reasons as to why so many people prefer a house rather than an apartment.
Co-ownership
The future may hold many unexpected events and the more people you go into business with, the worse for your investment. To elaborate, when you buy an apartment, you are not just living in the same building block as the rest of the owners, you are basically going into business with each and every one of them.
Do not forget, you do not only own your apartment, but also a percentage of the land property. That said, there are many things that could go wrong that could cause trouble to owners of apartments.
Some of the most common issues that apartment owners could face are:
- Apartments are often bought as an investment for rent income. This means that if the owner sees the property as an investment, he will most probably not be willing to spend too much money on building improvements while the owner living in the property is usually much more eager to do so.
- Heritage: One of the worst possible scenarios but not rare enough. A person who owns an apartment passed on leaving many shareholders. This procedure takes years to clear out, leaving no one to pay for the common expenses of the building or anyone to ask the money from.
- The building block needs improvements (ex. you have to make a roof insulation) but some of the rest of the house owners, are not willing or able to pay. Although legally obliged to, its never as simple and fast as it should be and the process of forcing someone to pay for his share of common expenditure could take a long time leaving your property on the risk of being damaged until the process is completed. Another example is a broken elevator. Imaging other owners saying they are not able to pay for an elevator while you live on the 5th floor and to you the elevator is a necessity.
These are the most important benefits of buying a house but what are the benefits of choosing to buy an apartment?
Here are the key benefits of buying an apartment vs buying a house:
Location
Apartments are usually found near the city center and you could save time and gas driving to work or taking your kids to school when buying a more central property rather than looking for an affordable house in the suburbs.
Usually Cheaper
In most cases, apartments are a cheaper option for people who cannot afford the luxury of buying their own house. Do not forget that the contractor building a whole block receives much cheaper prices for raw materials than what you will receive for building your house. In addition, you share the land with many other people, so it should come cheaper per square meter than what a house would cost.
Easier to rent
It’s much easier to rent an apartment rather than a house as there is a bigger demand for apartments for rent. Also, you can rent an apartment at a much higher price per square meter rather than a house. Usually, the smaller the property, the bigger the return for ex. a studio of 50 square meters in Nicosia is rented at 500 euro/month, while a 2-bedroom apartment of 80 square meters in Nicosia is rented at 600-700 euro. As for a 200 square meter house, it would be really difficult to rent for 10 euro per square meter.
Rent prices are more likely to go up rather than house prices. To put this in a brief economic perspective, in a growing market, prices tend to go up making it more and more difficult for people to buy which creates a boom in the rent prices which in turn go up. When the market is in recession, inflation will follow which causes a shift in demand curve and demand for rent increases, whereas demand for buying decreases due to insecurity and stability reasons of the buyers.
Whether buying a house or an apartment is the best choice for you, do not forget to take into consideration your personal goals, dreams and lifestyle while also being realistic as to what you can afford!
Do not hesitate to speak to a professional property agent which can advice you in the best possible way while also having the knowledge of the current market trends and prices.