Houses v Units: Which is the better investment?
One of the most perplexing dilemmas for many first time property investors is whether the invest in a house or a unit/apartment. Many are of the opinion that the house investment will yield a better result in the medium to long term.
The most recent data reported by onthehouse.com.au for July 2014 appears in the following chart:
When considering a long term (say 10 years) investment strategy, it is advisable to consider both yield and capital growth, as both are equally important considerations. The higher the yield, the easier it will be to service outgoings while capital growth increases future equity, offering additional borrowing capacity.
The data indicates that both houses and units/apartments seem to offer similar outcomes. For instance in Melbourne, which has performed the best of the east coast capitals, the combination of growth and yield for houses over 10 years is an average 9.85% per annum while for units it is 9.84% The Brisbane statistics show houses at 9.21% and units at 9.79%
There are other factors which should be included in the decision process. Maintenance, owners corporation fees, additional outgoings, vacancies and security.