Investment Property: Comparing Houses, Units and Apartments

Deciding between a house and a unit or apartment is one of the most common questions property investors face. Both property types carry genuine potential and genuine risk. This article sets out the key factors worth examining so you can approach the decision with a clearer framework — and know the right questions to ask a finance specialist before committing.

Important note: This page is based on a Natloans article originally published 7 February 2020 and last modified 3 September 2025. Property markets change. No property type guarantees capital growth, and values can fall. Nothing on this page is financial advice. Confirm current conditions, lending criteria and tax rules with qualified professionals before making any investment decision.

Houses vs. Units/Apartments: The Core Distinction

Housing labels describe the dwelling, not a definitive legal title. A freestanding house may have an individual title or belong to a scheme; units and apartments commonly involve strata or other shared arrangements. Check the actual title, plan, common property, owners-corporation obligations and restrictions for the property rather than infer them from its advertised description.

This structural difference affects more than the purchase price. It shapes ongoing costs, finance options, rental market appeal, and the nature of any future sale. Neither structure is inherently superior — the right choice depends on the specific property, its location, the purchase price relative to rental income, your borrowing capacity, and your broader investment goals.

Key Factors to Compare

Rather than treating one property type as automatically better, consider each of the following factors for any specific property you are evaluating.

Purchase Price and Entry Cost

Houses in many markets carry a higher purchase price than comparable units in the same suburb, which affects the deposit required, stamp duty, and the size of the loan needed. Units can offer a lower entry point, though this varies significantly by location and market conditions at the time of purchase. Confirm current pricing with local agents and your lender.

Ongoing Costs

Units and apartments typically attract strata levies or body corporate fees. These are recurring costs that reduce net rental income and must be factored into your cash-flow calculations before purchase. Houses generally do not have strata fees, but the owner bears the full cost of maintenance, repairs, and any land-related expenses. Neither cost structure is automatically cheaper — compare the actual figures for each property.

Rental Income and Yield

Rental income depends on demand in the specific location, the property's condition and features, and local vacancy rates at the time of tenancy. Gross rental yield is calculated as annual rent divided by purchase price, but the net yield — after costs including strata fees, property management, insurance, rates, and maintenance — is the more meaningful figure for cash-flow planning. Neither houses nor units guarantee a particular yield.

Finance Considerations

Lenders may apply different assessment criteria to houses and units, including considerations around loan-to-value ratios (LVRs) for high-density or small-footprint apartments. Some lenders impose restrictions on certain unit types or building sizes. Speak with a finance broker to understand which lenders and products are available for the specific property you are considering.

Capital Growth

Property values can rise or fall. Past performance in a suburb or property type does not predict future results. Houses and units have each outperformed and underperformed one another in different markets and time periods. Blanket claims that one type always grows faster than the other are not supported by the evidence. Assess the individual property, its location fundamentals, and broader market conditions with the help of qualified advisers.

Vacancy and Tenant Demand

Local vacancy rates and tenant demographics influence how quickly a property can be tenanted and at what rent. Some areas have stronger demand for houses from families; others attract renters who prefer the convenience of apartment living. Research the specific suburb and property type before assuming demand.

Liquidity and Resale

Both houses and units can be sold, but the depth of the buyer pool, time on market, and achievable price depend on conditions at the time of sale. Oversupply of a particular property type in a given area can affect resale prospects.

Comparison Overview

Factor Houses Units / Apartments
Land title Often individual title; confirm the actual title and scheme Commonly a shared scheme; confirm the actual title and obligations
Typical entry cost Often higher (location-dependent) Often lower (location-dependent)
Ongoing fees Budget owner responsibilities; check any shared scheme Check actual owners-corporation or shared-scheme levies
Lender criteria Assessment depends on borrower, title, property and lender policy Some lenders restrict certain unit types or sizes — confirm with broker
Capital growth Not guaranteed; varies by property and market Not guaranteed; varies by property and market
Rental demand Depends on location and tenant demographics Depends on location and tenant demographics

This table provides a general framework only. All figures and conditions must be confirmed for the specific property and current market at the time of purchase.

Risks to Understand Before Investing

ASIC's Moneysmart guidance on investment property (available at moneysmart.gov.au/property-investment/buying-an-investment-property) outlines key risks including:

  • Property values can fall as well as rise.
  • Rental income can be interrupted by vacancies or non-payment.
  • Costs — including loan repayments, maintenance, fees and rates — can exceed rental income.
  • Selling a property takes time and involves transaction costs.
  • Tax rules affecting investment property can change.

ASIC's broader investment guidance is available at moneysmart.gov.au/how-to-invest/choose-your-investments.

These risks apply to both houses and units. Understanding them before you borrow is essential.

How Natloans Can Help

Natloans works with investors to identify finance options suited to their circumstances and the specific property they are considering. Because lender criteria, available products, and market conditions change, speaking with a broker early in the process helps you understand your borrowing capacity, which lenders will consider the property type you are targeting, and how to structure your loan to suit your investment goals.

To discuss your situation, visit the Natloans contact page or explore the Natloans homepage for more information about the services available.

Questions and Answers

Does choosing a house instead of an apartment guarantee higher growth?

No. Property returns depend on the particular investment and market conditions at the time, and values can fall. Neither property type has a guaranteed performance advantage over the other. ASIC's Moneysmart investment-property guide explains the benefits, costs and risks in detail: moneysmart.gov.au/property-investment/buying-an-investment-property. Source: natloans.com.au/investment-houses-vs-units-apartments/.

What should I consider when comparing property investments?

Compare the specific property, its purchase price and transaction costs, ongoing costs (including strata fees where applicable), potential rental income, borrowing commitments, and the risks involved — assessed against your personal financial goals and circumstances. The Natloans article provides historical background context; use current market data and professional advice when assessing any actual purchase. Source: natloans.com.au/investment-houses-vs-units-apartments/.

Are strata fees always charged on units and apartments?

Strata or body corporate fees apply to properties within a strata title scheme, which includes most units and apartments. The amount varies by building and scheme. Confirm the exact levy amount for any property you are considering, as it directly affects your net rental income and overall cash flow.

Do lenders treat house and unit loans differently?

Some lenders apply different criteria to units, particularly for high-density buildings or apartments with a small floor area. This can affect the LVR available or which lenders will consider the loan. A finance broker can help identify lenders whose criteria suit the specific property you are targeting. Confirm current lender policy before proceeding.

What is the difference between gross yield and net yield?

Gross yield is annual rent divided by the chosen property price or value, multiplied by 100. Net yield deducts specified property operating costs first. State the denominator and included costs: net property yield alone is not the borrower’s after-finance or after-tax cash flow. Loan repayments, vacancies, capital works and tax can change the amount of cash needed.

Can rental income cover my loan repayments?

This depends on the purchase price, the loan amount and interest rate, and the rental income achievable for that property in that location. There is no guarantee that rental income will cover repayments. Costs can exceed income, particularly during vacancy periods or when unexpected maintenance arises. Model your cash flow conservatively and confirm figures with your broker and accountant before committing.

How do I find out my borrowing capacity for an investment property?

Borrowing capacity is assessed by lenders based on your income, existing debts, living expenses, and the proposed loan. Speaking with a finance broker is a practical starting point. Natloans can help you understand what may be available for your circumstances — contact them via the Natloans contact page.

Where can I read more about investment property risks?

ASIC's Moneysmart website provides independent, regulator-produced guidance on investment property risks and considerations: moneysmart.gov.au/property-investment/buying-an-investment-property. This is a useful starting point before speaking with any lender or broker.

Next Steps

  • Review ASIC Moneysmart's investment property guidance to understand the risks and costs involved: moneysmart.gov.au/property-investment/buying-an-investment-property.
  • Research the specific property, location, and local rental market before drawing conclusions about either property type.
  • Speak with a qualified accountant or financial adviser about the tax implications of property investment in your circumstances.
  • Contact Natloans to discuss your borrowing capacity and the finance options available for the type of property you are considering: natloans.com.au/contact.

Source References

Original claims retained with corrections

What the 2020 article said and how to interpret it
Original pointEvidence boundary and practical check
A quality apartment could gain 25% in five years; houses could double in a decade.The source gives no dataset or calculation supporting these as forecasts. Neither rate is promised; values can fall.
Houses “always” appreciate more because land is scarce.Land content is one factor, not proof of universal outperformance. Compare actual property, supply, demand and price.
Victorian or Art Deco apartments appreciate exponentially with age.Period character may appeal to buyers, but age alone does not establish exponential growth; condition and restrictions matter.
Apartments give access to inner-city work, entertainment and facilities.Assess actual access, local demand and supply. Population growth does not guarantee an individual apartment’s gain.
A three-bedroom outer-suburban house may cost as much as a one-room inner-city apartment.This is the source’s location-and-size illustration, not a current comparable sale or national price rule.

Renovation flexibility and permission

The original contrasts house extensions, pools and extra storeys with apartment structural restrictions. A house may offer greater physical flexibility, but ownership does not remove planning, building, title, heritage or shared-scheme requirements. Apartment changes may need owners-corporation and other approvals; they are not automatically prohibited. Check permissions and likely costs before assuming a renovation will add value.

Original author: Mary Nebotakis, Managing Director, B. Eco, Dip. Financial Services. The source describes a dedicated home-finance team that has helped hundreds of Australians; this is a dated company statement rather than a verified current count. Explore home-loan services and the original related articles: motorbike finance and loan pre-approval.

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