New Apartments vs Established Property: What Investors Should Compare
The choice between new apartments and established property is one of the most common decisions facing Australian investors. Both asset classes have merit. The right answer depends on investment objectives, time horizon, tax position, and risk appetite.
This guide provides a direct comparison across the factors that matter.
Depreciation: New Apartments Win Clearly
New apartments offer maximum depreciation — both the full Division 43 building allowance (40 years at 2.5%) and complete Division 40 plant and equipment schedules. Established properties offer reduced or no Division 43 entitlement depending on age, and post-2017 legislation limits plant and equipment claims for second-hand properties.
For investors using depreciation as a tax strategy, there is no comparison. New apartments produce materially stronger deductions, often generating $12,000–$20,000+ annually in the early years.
Stamp Duty: Off-the-Plan Concessions
In Victoria, new apartments purchased off the plan attract a concession where stamp duty is calculated on the land value only. This can reduce stamp duty by $20,000–$40,000 compared to purchasing an established property at equivalent value — a significant difference on the initial purchase cost.
Maintenance: New Apartments Win in the Early Years
New apartments carry minimal maintenance in the first 5–10 years. Builder warranties cover structural defects; new appliances and fixtures don't require immediate replacement. Established properties — particularly older houses — often carry deferred maintenance that absorbs cash flow and requires ongoing attention.
Capital Growth: Established Property Has the Historical Edge
Historically, established houses on land in established suburbs have outperformed apartments on capital growth over long periods. Land is the appreciating asset; buildings depreciate. For investors prioritising maximum capital growth over a 10–20-year horizon, an established house in a strong suburb can outperform an apartment in the same market.
However, this comparison is location-dependent. New apartments in inner-city Melbourne, Sydney, or Gold Coast locations with genuine supply constraints have demonstrated strong growth cycles. The developer, building quality, and location are as important as the asset class.
Yield: Varies by Location
Gross rental yields on new apartments in high-demand urban locations often match or exceed established houses in the same suburb. Smaller units attract more tenants on an absolute rent basis; lower purchase prices can also produce stronger yield percentages.
Strata and Levies
New apartments in larger buildings attract owners corporation (strata) fees. These cover building management, insurance, common area maintenance, and reserves. They reduce net yield and must be included in cash flow modelling. Established houses have no strata fees — though they carry full maintenance responsibility.
The Comparison That Matters
Investors should not compare asset classes in isolation. A $600,000 new apartment in inner-city Melbourne and a $600,000 established house 40km from the CBD are not comparable investments. Location, tenant demand, and income profile are the primary comparison points.
VSNRY works with investors to compare both options in the context of their specific goals. Book a consultation to run the numbers on the assets you're considering.
