Have you ever wondered whether you should be buying a house or a unit, and which one would make the best investment?
One of the burning questions that always comes up when I’m talking to investors is around the type of property they should be looking for – namely whether it should be a house or a unit – and which would make the best investment.
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Traditionally across Australia, houses have typically made better investments than units, performing better in terms of price growth with a 10yr average of 4.2% for houses and 3.8% for units.
This might not sound like a lot but keep in mind this is just the average. Some houses in Sydney have had 11%+ price growth!
Looking at an investment from a growth perspective only though is too simplistic.
For example, if you’re looking for a low risk investment and trying to find a property in a blue-chip area, investing in a house may set you back over a million dollars.
At that price, many investors would simply be unable to get into the market.
So the question of whether you should be buying a house or a unit really depends on your circumstance and the factors that you’re looking to take into consideration.
Is it affordable for you to buy a quality house in a strong performing area, or would you be better going into a unit, which might not get as strong growth, but is actually more affordable and gets you into the market?
The other criteria to think about is the rental yield.
Typically a lower priced property will get a stronger rental yield, meaning you’ll get more income and will effectively cost you less to hold than an investment in a house.
In this market, a house will probably only yields 3% and is going to cost you quite a lot more to hold in the long term in terms of ongoing maintenance.
So, if you’re wondering whether you should be buying a house or a unit, remember to keep the principles of strong growth at an affordable price point that won’t break the bank on your cash flow.
If you’re interested in exploring this further or are looking for suggestions on where these sorts of properties can be found based on your budget, get in touch with myself or one of the team and we can walk you through some options.