Are You Wanting Ridiculous Results From Your Assets In Context To Houses Or Apartments Which Is A Better Investment?
The short answer, it all depends on growth and performance with strategy for location and/or specific area.
Perhaps you don’t really know a lot about buying a home or investing in property. Are you always a little fearful of being tied to a mortgage?
Please note you must always do extensive research to ensure each property is either or a combination of the following elements:
- Cash flow positive
- High profit margins
- High cash on cash ROI
- High rental yield
And for this reason, houses and apartments are great investments…
There are specific streets, locations within cities and suburbs where houses outperforms.
It’s the same answer for apartments, it’s whether this type of asset outstrips performance of houses?
Because performance of any property type means it’s growth is determined by factors, location, growth rates and strongest demand.
What causes one to perform better than the other?
Is it the infrastructure in place which supports demographic mix and population growth rates?
Growth causes demand for specific style of property, right?
The demographics in every suburb or city identifies whether there’s stronger demand for houses…
Or stronger demand for Apartments.
Step 1, identify hidden opportunity in context to demand and how different property assets are performing.
Data from Real Estate Institute of Australia shows the difference in price growth in houses and apartments from 1997 to 2009.
Can you see how the graph trends over a 13 year period with growth rates between houses and apartments are almost the same.
The median apartment price increased from $153,200 to $373,300
And over the same period houses grew from $183,100 to $458,100,
As you can see similar growth for both property types, how do you know what type of property you would invest in?
Property and suburb, one of the most influential drivers for demand
is demographics of specific area.
Demand causes one property type to grow faster than another.
See chart below from Australian Bureau of Statistics…
See the number of people per dwelling in 1911 shows 4.5 people.
By 2011 on average the figure is less than 2.5 people per household.
2014 even more people are choosing to live in smaller sized dwellings
with fewer people per household.
An interesting growth expectation for 2026 (forecast by Australian Bureau of Statistics)….
The data suggests demand for new property by couples without children and single person dwellers.
Population growth requires almost double the number of dwellings today to accommodate the same amount of people.
In 2001, 1.8 million people lived on their own. According to ABS, this figure is expected to increase by between 57% and 105% by 2026.
*RPData, many new apartment developments are also being built in strategic locations, where a large proportion of market aspires to live.
The kicker for savvy property investors, can you see if marketplace can afford to buy a detached home?
Can you see good examples of these factors in your area?
Can you identify where apartment prices in the suburb are more affordable than a house?
Over a 12 months trend line have apartment values increased by 10% or more compared to growth of houses?
If you analyze the data from month to month basis, does the annual value growth for apartments outperform that of houses?
The key here is consistently…
If you do research you’ll see individual capital city markets perform differently.
The growth cycles and trends for apartments has most likely in your area outperformed houses over the last 12 months.
What’s the differential between median house prices and apartment prices?
If analysed, you’ll see deeper insights into performance of the market.
Capital city differential between median apartment and house prices
Understanding data in context to population growth statistics, demographic shifts and property value trends.
It is crucial for the type of strategy and what type of property
to purchase, right?
Houses or apartments?
Do you need to know what’s the demographic demand for houses or apartments in any specific area, suburb or region?
You make a decision based on sound research.
Looking only at demographics is an important, you also want to understand affordability factor and returns on investment (ROI).
Which type of property is best?
As well as population growth and infrastructure investment planned?
Do all these trends work with variables to influence your investment property performance and houses vs apartments investments?