Smart investing – House or Apartment?

According to the Real Estate Institute of Victoria, there has not been a huge difference in price growth between houses and apartments over the past 10 years. Median house prices have increased by more than 100 per cent, while median apartment prices increased by around 80 per cent.

New Research released by the QBE forecasts that the Melbourne median house price will reach $900,000 by the end of 2018 and will hit $940,000 by the year 2020. In the same research, Melbourne median unit prices are tipped to drop 4.8 per cent to around $535,000 in 2020. This is mainly attributable to the increase in apartment construction to cater for Victoria’s expanding population.

In terms of investment, there are many pros and cons to the debate of house versus apartment. Whilst houses do perform better in the capital growth department, they generally require more attention in terms of ongoing maintenance than units. Units have much of the maintenance and care of the building and surrounds undertaken through the body corporate.

Houses also generally cost more than units, so units often appeal to first time investors with a more limited budget. Data released by the REIV puts Melbourne’s current median price at $817,000, while for a unit it is $587,000.

In terms of rentability, both houses and units are in demand right now. To optimise your investment, it pays to look for places where rental demand is always high, such as around schools and universities, public transport or lifestyle areas with easy access to parks, cafes, shops or beaches.

The right investment choice for you will depend on your financial position and investment strategy. Are you looking for regular long-term income, or do you plan to renovate and sell the property as soon as you can? Before making any decision it’s important to have your investment plan well mapped out.