Blog: Houses vs Apartments
Which is the better investment?
Once upon a time, investing in apartments was considered inferior to purchasing a house – given the substantial value growth that ‘house and land’ investment has offered historically. Yet as Australia’s cities grow and our population swells, apartments are now yielding robust returns and creating a level playing field when it comes to return on investment and capital growth.
A premium apartment in a popular suburb can offer an investor strong capital growth – which can often be more lucrative than that of a house of equal value in an outer-urban location. When deciding which investment type is right for you,it is crucial to consider Australia’s changing demographics. There are more one and two-person households than there were twenty years ago, creating a higher demand for apartment living with easy access to transport and employment. Young professionals and lively retirees who pay handsomely in order to live close to cities and commercial hubs are key drivers of apartment value.
That said, owning a family home in the leafy, comfortable suburbs boasting
multiple bedrooms and outdoor space – can also provide substantial growth. Over a longer period of time, statistics show that houses do yield stronger growth than apartments, although apartments often enjoy better results in the short term.
So which to choose? Investment growth depends entirely on consumer demand rather than ‘genre’ of investment. Apartments are considerably more profitable than they once were – and if you are planning to purchase in the inner-suburbs, they can offer excellent growth. If you are considering buying in outer suburban areas, purchase property that’s in demand: if the key market of purchasers are families who value space and proximity to schools, houses are an ideal choice.
Consider too the quality of the property
whether an apartment or a house. Does it need substantial work which you will need to budget for, or is it a new build with lots of depreciation potential? If part of a body corporate, are the fees fair and the amenities of value to tenants? Both houses and apartments are strong investment options; you simply need to research the market you’re buying into. Critically, you’ll need to understand the rental return you can expect from your purchase. We welcome your call to review your financial situation prior to your next purchase.