Advantages of smaller household property investments

The recent release of the Real Estate Institute of Queensland (REIQ) June quarter median unit and townhouse price report helps to highlight some advantages of investing in single occupant housing versus multi-tenant dwellings.

REIQ data reveals that median prices of units and townhouses have increased in the three months to June, despite the fact that the number of sales declined over the same time period.

The REIQ explained the difference in purchases as related to a drop in owner-occupier activity in the market.

“As was the case with the house market, there was reduced unit and townhouse sales activity over the June quarter as many buyers waited for the return of the stamp duty concession on 1 July,” REIQ chief executive officer Anton Kardash said.

“However, as first home buyers and investors were unaffected by the stamp duty change, these buyers were more prominent over the June quarter.”

Mr Kardash explained the relative attractiveness of this type of dwelling when placed next to the often larger and freestanding house.

“Given the affordability of units and townhouses, as well as their often more central locations, first-time buyers and investors often compete for this type of property which may be partly responsible for the increases in median prices we experienced over the period.”

When it comes to household property investments, besides the affordability factor, units and townhouses have plenty to offer investors in terms of property management and broad appeal.

Maintenance requirements are usually less taxing for a small one or two bedroom unit than a large house with a huge back garden.

In certain areas – such as resource-rich mining towns – a unit or a townhouse may be the preferred investment for a renting or selling strategy. As many people fly in and out to the region to work, they often only want temporary accommodation.

Family-focused homes are still in demand, just not likely to as greater scale.

When the time comes to selling household property investments, you may find that the value of a unit or townhouse has appreciated much faster and that you will be able to market to a broader audience.

By Steve McKnight

Steve McKnight, the founder of PropertyInvesting.com, is a respected property investing authority as well as Australia's #1 best-selling business author.