The focus should be on how your choice positions you for long-term growth and flexibility rather than the structure itself.
Houses are typically known for higher capital growth due to land value. However, certain units in premium locations can deliver similar returns, especially in areas where scarcity or development restrictions limit supply.
With property prices rising, first-home buyers and entry-level investors are rethinking their entry into the market. Affordability is a key concern, pushing many towards smaller, more cost-effective units in urban areas as a practical way to start growing equity. Still, success depends on more than just the initial purchase price.
The belief that houses always perform better comes from the idea that land increases in value while buildings lose it. Although there's truth to this, it's overly simplistic. Real capital growth is driven by limited land in high-demand areas. It is less about having a backyard and more about how rare your property's location becomes over time. This applies equally to well-placed units and free-standing houses on the outskirts of the city.
Houses typically give owners more control along with the ability to renovate or subdivide, which appeals to those aiming for long-term value and adaptable lifestyles. However, these benefits might require moving further from city centres. Many strong-performing house investments are located 10 to 25 kilometres from major CBDs where demand and infrastructure support consistent price growth.
Units, especially low-density ones in established suburbs, are no longer seen as an inferior option. Areas like Bondi, where planning controls limit supply, have witnessed inner-suburban units achieving annual growth rates of 7% to 8%. In such locations, demand exceeds supply. These units also tend to offer better rental yields and lower holding costs, which is beneficial in environments with high interest rates.
Although investors and first-home buyers may have different objectives, they often share common criteria when selecting a property. The key question is whether the property will help you progress financially. For investors, strong equity growth and low ongoing costs can make it easier to buy again. First-time buyers benefit from flexibility, whether that means living in the property, renting it out or using the equity to fund future investments.
Ultimately, building wealth is not about choosing a perfect house or unit. It's about selecting the right property in the right location at the right time. A well-planned approach, such as buying three high-quality houses and one commercial property over 12 years, can produce substantial passive income. The effectiveness of this strategy depends more on timing, financing and asset selection than on whether the home is attached to another.
