An Australian first‑homebuyer ended up about $70,000 worse off despite tapping first‑homebuyer perks, underscoring how entry‑level apartments can erode wealth when strata, borrowing and transaction costs snowball.
Melbourne buyer Nick Rabba purchased a boutique eight‑unit apartment in Carnegie about three-and-a-half years ago, when mortgage rates sat near 3 per cent, and qualified for first‑homebuyer concessions, meaning he did not have to pay stamp duty and lender’s mortgage insurance.
“When I bought the apartment, I knew I probably wouldn’t make any money, but you don’t really realise how bad it is until you really look at the numbers,” Rabba told Yahoo Finance.
After selling the home last week, he estimates he’s roughly $70,000 behind where he’d be if he’d rented instead, once he tallied mortgage interest, strata, and buy/sell costs.
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Nick Rabba has learned the hard way that buying is not always better than renting. Picture: Facebook
He made a $70,000 loss over three years on his apartment. Picture: Nick Rabba/AllHomes
While strata fees are common among apartment owners, Rabba’s annual bill of $1600 ballooned to a hefty $4000 per year during his ownership.
“I don’t know why the strata was eating up the amount of cash. There was no pool, there’s no gym. It’s just a two-storey freestanding building with the shared driveway,” he said.
“Plus there was special strata levies of $6000 to fix the roof which is fair enough, but the costs kept piling up. And the thing with strata is you don’t really have a say, if a majority votes it in then you have to go with what they say.”
Beyond the escalating strata fees, Rabba also faced the unavoidable transaction costs of buying and selling, such as real estate agent commissions.
The front-loaded interest portion of new home loans further exacerbated his financial position.
The ground floor apartment didn’t appreciate in value over more than three years. Picture: AllHomes
He was paying about $700 a week to service his mortgage, while a similar rental property would have cost around $500 a week.
“I wouldn’t do it again,” he admitted to Yahoo Finance.
“I never should have done it in the first place, but I just had things going on, and I just wanted to get into the market.”
Now a mortgage broker himself, Rabba advises clients against investing in apartments, having heard countless stories of surging strata costs, particularly in high-density towers with extensive facilities.
While acknowledging the need for a place to live and the security of owning your own home, he believes that in many cases, it can be more beneficial to ‘rentvest’ – renting while investing savings – with the long-term goal of purchasing a freestanding house.
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