House versus Apartment

Does a house make a better investment than an apartment? It's a common question but like the 'old versus new' debate, the answer depends on who you speak to!

Houses are often perceived as slightly ahead on price growth than apartments; however, a recent RP Data Property Pulse report states that apartment values are increasing. Over the past five years (July 2006-July 2011) apartment values for combined capital cities have climbed 6.0 per cent, up 1.2 per cent on housing values during the same period.

So where does that leave you? Well, it's important to remember that regardless of whether you buy a house or apartment, your ultimate goal is to find a property that will deliver the best return on your investment in the long term. Factors like how much you can afford and what you want to achieve from your investment should drive your decision-making.

Here are some issues to think about that may help clarify which type of property best suits your investment goals:

  • Rental demand: do your research about what type of dwelling will be popular in what area. An investment apartment near a university, for example, can allow you to tap into the demand for accommodation by overseas students.
  • Affordability: apartments are cheaper to buy, making them a good option if you are a first-time investor and want to break into an up-and-coming market you couldn't otherwise afford.
  • Fees: in addition to the usual landlord costs like council and water rates, you will have to pay strata or body corporate fees if you own an apartment. The more facilities on offer - such as pools, gyms or lifts - the higher the strata levy.
  • Maintenance: houses generally require more maintenance than apartments but the upside is you can decide when to spend money on repairs. With an apartment, you are locked into a strata levy but at least much of the maintenance is taken care of by the body corporate.
  • Capital growth: knowing the median prices and sales history of properties in the area you are considering buying into will give you a more accurate idea of whether a house or apartment will attract more capital growth.

Did you know?

When it comes to a choice between living in a house or apartment, a recent survey by PRDnationwide shows the house comes in as the top choice among Australians.

The survey of 1500 people nationwide found that a detached house on a 600sq m block within the inner 15 km ring of a CBD is the most preferable type of home.

A third of respondents said they would consider a coastal or regional property, 18 per cent wanted to live in a townhouse located six kilometres from the CBD and 12 per cent wanted to live in an apartment only three kilometres from the city.

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