House or Unit? The Answer Is in the Land.

"As an investor, would you buy a house or a unit?" It's one of the most common questions I get. My answer is quick: a house, every day of the week. But units deserve a fair hearing too, because plenty of investors end up in one for reasons that sound sensible at the time.

The Short Answer

If your goal is long-term wealth, I'd buy the house. Not because units are always bad, but because over the long run, the two assets don't grow at the same rate, and the reason is built into what you're actually buying.

Borrowing Capacity Isn't a Strategy

Here's the trap I see most often. The bank tells an investor they can borrow $300,000, $400,000 or $500,000, and the next step becomes "what can I buy for that?" Very often, the answer is a unit.

Your borrowing capacity tells you the ceiling on what you can spend. It doesn't tell you what you should buy. Those are two very different questions, and mixing them up is how investors end up holding an asset that doesn't do the job they needed it to do.

It Comes Down to Land

Long-term history shows that units don't grow at the same rate a house does, and it comes down to one factor: the land component.

Buildings age. They need maintenance, and over time they lose value as they wear. Land is what's scarce, especially land close to services, transport and the CBD. When you buy a house, a large share of what you're paying for is the land. When you buy a unit, you own a tiny slice of a shared block, and most of your money is in the building.

What the Numbers Show

This isn't just a gut feel. The Federal Treasury's own analysis for the 2026-27 Budget, based on Cotality data over the past 20 years, compared average annual capital growth for houses and units held for five and ten years:

Source: Treasury, Budget 2026-27 fact sheet "Negative Gearing and Capital Gains Tax Reform" (Cotality data, average over the past 20 years). National averages, not specific to Tasmania.

A gap of just over one percentage point a year doesn't sound like much. Compounded, it is.

If You're Still Looking at Units

Some investors will still end up weighing up a unit, and that's fine as long as it's a decision made with the full picture. My advice is simple: run your numbers, and don't run them on one to two years. Run them on five to ten years, and include every cost.

• Body corporate levies, and whether the sinking fund is healthy or a special levy is coming
• Council and water rates, insurance and maintenance
• Vacancy and management fees
• Realistic growth, based on what units in that building and street have actually done, not the suburb headline figure

Then look at the return with all of that added in. If the numbers still stack up over a decade, you've made an informed decision. If they only work over the next year or two, that's your answer too.

Frequently Asked Questions

Are units ever a good investment?

They can suit some situations, but they have to earn their place. If you're considering one, test it over five to ten years with every cost included, including body corporate levies, and compare it honestly against a house in the same budget range.

Why do houses usually grow faster than units?

The land component. A house sits on its own block, and land is the scarce part that appreciates. A unit owner holds a very small share of land, so most of their money is in a building that ages over time.

My borrowing capacity only stretches to a unit. What should I do?

Don't let the borrowing figure make the decision for you. There are often well-located houses below the median price, especially outside the most expensive suburbs. That's exactly the kind of search we do. Book a free 15-minute call and we'll look at your options.