Do you remember when you first moved out of home? For a lot of people, this youthful foray into adulthood was undoubtedly fun, but also largely coupled with some, how shall we put it, alternative financial choices. Eating two minute noodles, scouring between the couch cushions for petrol money, and renting a tiny, affordable unit became a rite of passage. And while units may be perfect for university students on a shoe string budget, does that mean they should really be the investment vehicle of choice for the smart property owner? If units are so affordable and attractive, why are we seeing houses turning the tide and winning the battle for both capital growth and yield?
What is a better performer; Houses or units?
It’s a question as old as the hills… particularly if those hills have a mix of high rise unit developments and established family homes on them. Historically, houses are known for stronger and more reliable capital growth, where as units have gained themselves the reputation for higher yields. There’s some truth to both of these points, but as time goes on we’ll see the latter may become fiction.
In the past units have typically sat at the more affordable end of the property scale than houses, giving first time property buyers a seemingly easier and more attractive way to enter their local market. Houses, alternatively, usually demand a higher price point, and thus require a more sizable outlay (deposit) to acquire.
According to a Domain Group House Prices Report, the recent surge in Sydney prices has pushed the median price of units in Sydney higher than the current median house price in Brisbane, Adelaide, Hobart and Canberra.
There are still potential draw backs for owning units, of course. Unexpected building maintenance costs, only owning a very small portion of the underlying land on which the development sits reducing your capital growth possibilities, and scariest of all, unit oversupply. High rental demand may be present in an area today, but a new development approval next door may change that literally overnight.
The endearing dream of owning a stack of bricks and mortar of your very own is not just romantic, but it also seems to be pragmatic.
The trick is entering a solid, reliable property market without the burden (and now more than ever, the insurmountable task) of having to muster up the enormous deposit. And in select property markets around the country we are seeing these opportunities come to light.
Believe it or not, there are economically muscular markets, reliant on several established industries, where entry price points for quality family homes are under $500,000. And for the investors reading this, the robust rental yields mixed with unheard of interest rates mean that these properties pay YOU to own THEM.
FAST FACT: HERVEY BAY
Forecasts predict the population in Hervey Bay will rise from the 43,000 today to 89,000 by 2021. That's a population explosion of 100% in 5 years.
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This approach obviously depends on location, entering the market at the appropriate time and selecting the right property type; thus providing the ability to maintain the property and rent it consistently - creating a healthy and sleep-at-night type holding experience is what we all want after all.
But make no mistake; The days of needing to buy a “shoe-box” in order to just get a foot hold in a strong Real Estate market are over. You just need to know where to look.
Our criteria for selecting growth markets that will protect your hip pocket as well as target capital growth has been developed over the past 25 years. During this time, our criteria has allowed us to boast a 100% success rate in picking growth markets right around Australia. To learn more about how we research and identify these markets for our customers view our 3 Step Criteria for Property Investing now. Click here now.