House or Unit? Here’s the Answer for First-Time Buyers - Teach Me About Property

Buying your first property is a big step—and it’s normal to have questions, especially when it comes to deciding between a house or a unit. At the recent TMAP Property Summit, one first-time buyer from Melbourne asked our CEO, Massey Archibald, just that. With $80,000 saved up, they wanted to know: Should I buy a house or a unit?

It’s a common question, and Massey’s advice might help other first-time buyers facing the same decision. Let’s break it down.

House vs. Unit: What’s Right for Your Money?

This Melbourne buyer is in a great position. With $80,000 in savings, they have the flexibility to consider both options:

• An entry-level house in Melbourne currently ranges between $550,000 and $700,000.
• In contrast, a unit closer to the city centre is often within reach for a similar price.

Massey’s advice? If you can afford a house in your city, go for it. Houses have historically outperformed units in value growth, which is key for building equity over time. It’s generally more beneficial for first-time buyers to opt for a house if they’re in a position to buy one, rather than compromise on location to get a unit.

Why a House Could Be the Better Investment

Houses and units are different in the way they build value. Here are a few reasons why houses tend to be a better long-term investment:

1. Land Appreciation: A house typically includes a block of land, which appreciates over time. Units have limited or shared land, meaning they don’t benefit from land value increases in the same way.
2. Market Demand: In many cities, houses are in higher demand due to their space, privacy, and potential for future renovations. This demand often translates to better resale values.
3. Growth Potential: A house offers more flexibility for renovations and extensions, which can add value to the property over time.

When a Unit Makes Sense

Buying a unit isn’t necessarily a bad choice, especially if it’s the only option within your budget or if location is a high priority. In areas closer to the city centre, units can be a more affordable entry point to property ownership. However, if you have the choice between a house and a unit within the same city, the house is usually the smarter pick.

Making Your First Purchase Count

Massey’s final advice is clear: If you can buy a house in your city, go for it. The option of a unit exists to help people stay within a certain location when houses are out of reach. But if your budget allows for either, choosing a house will likely give you a stronger foundation for future financial growth.

First-time buyers, take note. Property investment is about making choices that set you up for long-term success. So if you’re in Melbourne (or any other city), weigh your options carefully—and consider the power of a house over a unit to build your wealth over time.