One of the biggest questions surrounding property investment is: ‘What’s the best investment property type for me to buy?’ This article breaks down the different types of property that are available to buy. We also list the pros and cons of using each type as an investment vehicle.
Best Investment Property Type?
A house is a single free-standing structure that occupies a complete plot of land. Houses are the typical choice of home for Australians, with the word ‘house’ being synonymous with ‘the place where a person lives.’
- Since houses are the most desired property, they have the highest demand.
- Highest prices result in larger profit when used as an investment
- Higher prices also mean larger barrier to entry
- More ongoing costs and expenses
Apartments are much smaller dwellings when compared to houses. This makes them ideal for individuals and couples without children.
- Smaller size means lower prices
- More availability closer to cities
- Less space
- May not have parking
- Apartments are currently over-supplied in some markets.
Townhouses combine the best of both worlds. They aim to provide as many of the benefits of living in a typical house as possible, but for a cheaper price.
- Large enough for families
- Cheaper prices than houses
- Full inclusions (no shared facilities, unlike apartments)
- Typically have small yards
- Still relatively high-density living
- Depending on the Housing Title, there may be body corporate fees
At the time of writing, we recommend townhouses as the best investment property type.
The high prices in the property market are what makes the market excellent for investing. But it also means that unless you already own a house as an investment property, it’s challenging to afford one now.
For many years investors have overcome the high barrier to entry by investing in apartments, as the price is lower. So developers have built more apartments to meet this demand. And to maximise their profits, developers build high-end apartments to increase the price. This has led to an oversupply in high-end apartments while maintaining an undersupply of low-end apartments.
This has made it difficult to find tenants for investor-owned apartments. It’s also led stagnant (or even reduced) pricing in that particular market.
Houses are still too expensive for the average Australian couple to be able to afford to more than one of them. Townhouses are the logical choice that remains as the best investment property type.
This rationale is why all our property development projects are for townhouses or detached houses rather than apartments.