What Makes For A Better Investment – Houses or Units?

Whether you should invest in a house, or an apartment is a decision you shouldn’t make lightly and will depend upon a range of factors.

There are so many things to consider before buying. Keeping an open mind and doing your research is integral to reaching the right decision and expelling any doubt.

So which is best? House or unit? There is no simple answer, no right or wrong. It all depends upon your tastes, your financial situation, lifestyle, location, the economy, housing demand, the local property market, prior growth rates & rental yields and much more.

When Does Investing In An Apartment Trump Investing In A House?

Your property must perform well long-term to create money for your future, so you need to consider what people are likely to prefer in 10 to 20 years, as well as what they’re snapping-up now. There are 4 things to consider when it comes to units:

1. In some areas houses will always achieve greater capital growth gains compared to units, and then there are areas where the reverse applies; units surpass houses. It all rests upon supply and demand which is dependent on the demographic make-up of the area. For example, the more demand there is for houses results in pushing property values up, delivering improved capital growth.

2. Some evidence points to units as likely to become the more favoured form of living for certain demographics into the future. The Australian Bureau of Statistics has reported that between 1986 and 2011, one-person households increased by a rate of 5%, meanwhile family households reduced by about 6%, suggesting a trend towards Australians opting to reside in smaller homes containing fewer people.

3. A lagging Australian infrastructure and public transport system coupled with continuing population growth is leading to our cities becoming denser, building up, not out. This suggests apartment living will spike in the future as people look to move into metropolitan areas for the lifestyle on offer and to be closer to work.

4. RP Data also points out that over the last few years across various areas unit prices have jumped at a higher-rate compared to single-dwellings.

When Shouldn’t You Invest In A Unit?

The deciding factor when choosing to invest in a unit or a house should come down to the Body Corporate fees.

Most apartments and units are subject to Body Corporate fees. These cover grounds and property maintenance, shared electricity and any facilities open to residents such as a gym, or a pool.

The 2 Major Problems With Body Corporate Fees

Body Corporate costs can range anywhere from $20 to $250 a week depending on the size, amenity level and management of the complex. The 2 frustrating problems with such fees:

1. They eat away at your profits yearly.

2. They can rise from year to year at an unpredictable rate of increase.

Though houses don’t attract Body Corporate costs, they do require the homeowner to pay for such things as insurance maintenance, and pool fencing costs.

And don’t forget, if the house comes with a pool and large yard, you will need to tend to, or pay for the up-keep yourself.

Investment Property Advice To Live By: 

This article was originally published on PropertyJobs.com.au