House vs apartment: which is a better investment?

If you plan to invest in real estate you will need to choose what type of property to buy, and this generally comes down to a choice between a free-standing home or an apartment.
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To make the decision easier, here are some points to take into consideration:

Apartments are an attractive option for first-time property investors because they are usually more affordable than houses. According to the Domain Group, the median price for houses in Australia is currently $636,315 while apartments cost around $476,023. Sydney has the highest median price among major capital cities.

Since most apartments are built in inner-city areas, they tend to be more appealing to young Australians who want to live near their workplace and enjoy an urban lifestyle. Most houses are in suburban areas and tend to be more popular with families.

Investing in apartments requires less responsibility for repairs and maintenance, improvements and the overall appearance of the property since you have the body corporate to take care of this. However, you will still need to pay for the body corporate fees which can increase overtime especially if you have amenities in the building such as a gym, concierge, or swimming pool.

Investing in houses

The main advantage of investing in houses is land ownership. Land tends to appreciate overtime unlike buildings which can depreciate unless they have heritage value. While the initial cost of buying a house is higher than an apartment, the investment is often worth it because of long-term growth. This will depend on the location you’re investing in.

Buying a house also gives you the freedom to do renovations that can potentially increase the value of the property and the rent you can charge. However, with a house you are accountable for all of the repairs and maintenance, unless you hire a property manager to do all the work for a fee.

Bottom Line

There is no right answer to whether a house or an apartment makes a better investment. Whichever you choose, it’s important to consider your financial situation, research the market, go for areas with higher potential growth and get the right home loan to ensure that you maximise the return on your investment

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Tags: buying your first home | investment property

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