Australian property market: are apartments a good investment

Australian property market: are apartments a good investment

The short answer as to whether apartments are a good investment is… that there isn’t one. The best choice is an individual one and depends on many factors—do you want a short or long-term rental? Do you want to self manage your property? Do you want a property manager? This list goes on!

But fear not! Here you’ll find a direct comparison between choosing a house or apartment as your ideal investment property—and how to make sure it is effectively managed. 


Why should you consider an investment property?

The positives of having an apartment as an investment property are that through selecting the right tenant you can have a constant flow of rent payments coming through. Or if you decide to pursue the short-term leasing route, you can list it with a trusted property management company, such as Maloney's Property and Accommodate Canberra, so that your property can reach its full potential.

Potential risks of purchasing an apartment as an investment property can occur if you haven’t done your research or weighed up the pros and cons of property investment in a house or an apartment.

When considering buying an investment property there are two key things to consider:

  • Rental yield
  • Capital growth

Rental yield

One of the first things you need to consider in relation to your potential investment property is the ‘rental yield’ – this is the profit you make from your property as a percentage of its value.

A higher rental yield means more money in your pocket, but there are other things you also need to take into consideration, especially if your property has low capital growth, such as dependence on tenants from a particular industry, where there is a risk that it could close down or move to another location. 

Capital growth

Capital growth is the increase in the value of a property over time and is probably the key way most investors build wealth in their property investments

In general, apartments will have a higher rental yield because of their location and access to amenities, entertainment, cafes and restaurants. Traditionally, houses will have higher capital growth because they have more land than apartments and that appreciates over time.

Now that you have an understanding of the impact of rental yield and capital growth, it’s time to take a closer look at the differences between choosing a house or apartment for your investment property.


Positives of investing in apartments
  • Cheaper than houses
  • Offer higher rental yield
  • More attractive to tenants because of the location
  • Cheaper maintenance because of collective responsibilities through strata management


Positives of investing in houses
  • Come with land which can contribute to capital gains
  • No need to consult with strata management when you want to make changes to your property
  • Potential for longer, more stable rentals
  • More space for gardens and private parking


Negatives of investing in apartments
  • Limited capacity to expand or extend
  • Strata fees can add up
  • Need to get approval from strata management for any significant changes


Negatives of investing in houses
  • Higher initial cost
  • Rental yield is lower than apartments
  • More maintenance and renovation costs
  • Higher maintenance for tenants in urban areas where location and amenities could be a higher priority


Now the decision is in your hands. So, what will it be—the house or the apartment?

Make sure to consider the best leasing arrangement for you, and if that involves short-term leasing reach out to the team at Accommodate Canberra, who can use their expertise to bring your property to their esteemed guests. 


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