My husband and I are both school teachers with a combined income of $270,000 per annum. We have one child and live in an apartment valued at approximately $1 million. We have a mortgage of $490,000 and have $500,000 between us in super. We anticipate inheritance of one million over the next few decades. Should we try to upgrade to a house?

A great question. I’m not sure the answer is entirely a financial planning matter, but I’m happy to take a swing. This is very topical in my household, because right now my wife and I are spending a couple of months based in New York, and so are living in an apartment, something we haven’t done since our 20s.

A large proportion of the world’s population are very happy living in apartments, but in Australia we covet a backyard.Credit: Simon Letch

Whilst neither of us would want to stay in the particular apartment that we are in long-term, we have both come to the conclusion that living in an apartment later in life could suit us both extremely well.

It’s interesting that such a large proportion of the world’s population is very happy living in apartments, and yet as Australians, it’s something we struggle with. Success seems to be defined by having a backyard.

Australian property has a pretty good track record of appreciating in value over the long term. The extent of that growth is usually inflated because it fails to take account of all the money spent on renovations and improvements, but nonetheless with a 10-year plus time frame, Australian residential property has typically been a good asset to hold.

When we consider what underwrites that appreciation, it’s not the physical building, which deteriorates through usage. Rather it is the land that the building sits on.

As the owner of your apartment, you have a share of the land it sits on. However, as a proportion of the total value of your apartment, the land value is relatively small. For this reason, apartments typically appreciate less over the long term compared to standalone dwellings with a greater land value.

If life was purely about accumulating the maximum possible amount of wealth before you die, then trading your apartment for a home would probably make sense. But there’s so much more to be considered.