New data reveals answers unit vs house investment question

A new report has flipped the script on one of real estate’s biggest assumptions: that units are a smart, affordable choice for investors.

InvestorKit’s new whitepaper, House vs. Unit Performance: 7 Regions with the Biggest Gap, reveals that units across Australia’s largest cities have been outpaced by houses for over a decade – and the gap is only growing.

Oversupply, skyrocketing strata fees, and faster building depreciation have been blamed for dragging unit investments down, while houses continue to deliver stronger returns and long-term growth.

“While many investors view units as an affordable entry point, houses have significantly outperformed units across most regions studied,” Arjun Paliwal, CEO and Head of Research at InvestorKit, says.

“Over the past decade, units haven’t just lagged behind houses, they’ve consistently delivered weaker returns. This gap doesn’t signal opportunity; it’s a warning sign for investors.”

Arjun adds that houses generally benefit from larger land value components, lower oversupply risks, and superior long-term compounding returns.

“Oversupply is a major reason why units underperform,” he says.

MORE NEWS

Revealed: Aus’s top disaster prone suburbs

‘Surprised’: RBA’s next move to shock Aussies

Revealed: True scale of Aus’s vanishing rentals

Arjun Paliwal, CEO and Head of Research at InvestorKit

“When too many units hit the market, prices can stagnate or fall, limiting long-term growth. “Additionally, strata fees also play a crucial role in shaping the long-term performance of apartment investments.

“High strata fees, especially in buildings with costly facilities like pools and gyms, while may attract tenants and add lifestyle appeal, can significantly reduce net returns over time with the ongoing fees.

“The numbers clearly show houses are the stronger performer almost every time.”

The report shows that in all seven regions, house returns were significantly higher than unit returns, with units often recording diminished or even negative value growth despite strong rental yields.

Paramatta in Sydney topped the list for having the greatest price gap between houses and units over the past decade.

Units saw only a 2 per cent increase in value while houses saw a 76 per cent increase.

In Ryde, Hunters Hill, NSW, units rose by 17 per cent in value while houses grew by 89 per cent.

MORE NEWS: Aus’s worst suburbs for mortgage stress revealed

Thinking about investing in a unit? Do your research, with some areas performing better for houses.

In Strathfield, Burwood and Ashfield – also located in NSW – units value grew by just 15 per cent over the past decade, compared with house prices, which jumped by 73 per cent.

In Melbourne, unit values even managed to decline over the past decade, dropping by -4 per cent, compared to a 56 per cent growth recorded by houses.

In Yarra, VIC, unit prices showed no growth, while houses grew in value by 49 per cent.

Other notable markets included inner Brisbane, where unit values rose by just 31 per cent since 2015, compared to a 103 per cent jump in house prices, and South Canberra, where unit values rose by 29 per cent, whereas houses grew by 88 per cent.

The whitepaper also notes that while some unit markets defy the trend, especially in locations where unit supply is tight like Hobart, Coffs Harbour or metro areas where development has been limited; houses remain the superior alternatives at similar price points in almost every case.

The post New data reveals answers unit vs house investment question appeared first on realestate.com.au.