Proximity to the amenities that today’s society demands is a far greater driver than purchasing an established home in an undesirable location.
Today property buyers have many options when comparing properties on offer ranging from CBD based to rural areas from high density to low density living and from small studio apartments to architecturally designed masterpieces.
No matter what type of property you buy or where you buy one main principle remains true:
The value of property is in the land component. This means that if an apartment complex is built on a parcel of land, the underlying value is in the land, divided among each apartment. For this reason, detached houses are a superior investment as the owner is entitled to the appreciating land value.
The truth is that neither houses, town houses, villas, units nor apartments represent an all-encompassing superior property investment. Each investment has its own characteristics working in its favour, as well as having characteristics working against it.
Comparatively, Australia has taken its time transitioning into higher density living, particularly given our proclivity toward living within the greater limits of our four largest capital cities (combined, Sydney, Melbourne, Brisbane and Perth contain half of Australia’s population).
As the question of housing affordability intermittently looms overhead combined with notable shifts in Australian culture, higher density living is becoming more and more appealing. Generations of Australia’s past desired the quarter acre block in the suburbs, but only half of us have parents belonging to those generations. The other half of us hail from higher density cultures like the United Kingdom, China and India to name a few.
Although the strong majority of households are detached homes, a clear shift toward higher density living is apparent as time progresses. This can be observed both in household composition through census data as well as in new dwelling approvals within our capitals.
For the property investor, however, the more important consideration is whether growth prospects are available in apartments as they are in detached dwellings. Often, apartments can reap far greater returns than their detached counterparts because of their location. Proximity to the amenities that today’s society demands is a far greater driver than purchasing an established home in an undesirable location.