When it comes to property investment, the age-old debate often centres around whether houses or apartments offer a better return on investment.
Both types of property have their own merits and drawbacks, and what might be an excellent choice for one investor might not necessarily suit another. Below, we delve into the key aspects of each to help you make an informed decision.
Houses: Traditionally, houses have shown stronger capital growth compared to apartments. With the ownership of land, houses often appreciate in value over time, especially in sought-after locations. In a growing family-centric community, a house can be a goldmine for long-term investors.
Apartments: Although apartments generally show lower capital growth, they are often situated in prime locations that attract a high volume of renters, such as city centres or near universities. This can make up for the slower appreciation rate.
Houses: Houses, especially in suburban areas, may offer lower rental yields in comparison to apartments. Families seeking houses are often looking for longer-term rentals, leading to less frequent turnover but potentially lower yields.
Apartments: Generally, apartments offer higher rental yields, particularly in bustling urban areas. However, it’s crucial to account for the body corporate fees, which can eat into your returns.
Maintenance and Upkeep
Houses: As the owner of the entire property, including the garden and any external structures, maintenance can be more demanding both in time and cost. From lawn care to roof repairs, you’ll need to budget for a variety of upkeep tasks.
Apartments: One of the advantages of owning an apartment is the lower upkeep costs. Most of the external maintenance is taken care of by the body corporate, leaving you to handle only the interior.
Houses: Generally, attract families looking for stability and more space. This often translates into longer leases, reducing the hassle of frequently finding new tenants.
Apartments: Usually attract younger professionals or students who value proximity to work or school over space. While this could mean more frequent tenant turnover, it also allows for rental rate adjustments more often.
Houses: Offer more flexibility in terms of property development. You can make substantial changes to the property, such as extensions or subdivisions, subject to council approvals.
Apartments: Provide limited scope for making structural changes, and any renovations need to be approved by the body corporate.
So, which is a better investment—houses or apartments? The answer isn’t straightforward and depends on your investment goals, risk appetite, and management commitment. If you’re looking for long-term capital growth and are prepared to invest time and money into property upkeep, a house could be a better option. However, if you seek higher rental yields and lower maintenance responsibilities, an apartment might be more up your street. Before taking the plunge, it’s essential to consult with real estate experts and financial advisors to tailor a strategy that aligns with your investment