How To Strategically Choose Between Buying A House, Unit Or Townhouse 

When it comes to buying a home, there are lots of factors to consider, especially when it comes to the type of property you’d like to purchase. From units and townhouses to standalone homes, each of these properties come with their own unique characteristics, advantages and disadvantages. It’s important to find a home that best suits your budget, lifestyle and financial goals.

To help you make this choice, we’ve pulled together a list of pros and cons to help strategically choose between buying a house, unit, or townhouse.

Buying a home

Buying a freestanding house is the goal for many, but financial constraints and other factors can make it tricky to turn this into a reality. Here’s a quick snapshot of the advantages and disadvantages of buying a home compared to a townhouse or unit.

Advantages

• Property and land appreciation: Historically, house values in Australia have shown appreciation over time. In addition to the house, the value of the land it sits on may appreciate over time, contributing to potential long-term capital gains.

• Greater control: Unlike apartments or units, owning a house typically means you have sole control over the property. You often have freedom to make decisions when it comes to landscaping, renovations and improvements without having to seek approval from a strata or homeowners' association. However, keep in mind you may need to seek building approval depending on the extent of your upgrades.

• Family friendly: Houses generally offer more space and privacy compared to apartments or units, making them a great choice for families. If you value having a backyard or larger living areas, a house might be more suitable for your lifestyle.

Disadvantages

• Higher purchase price: Compared to units and townhouses, houses are typically more expensive to purchase. If you don’t have the funds to purchase a house, this can be a significant barrier. According to Domain’s First Home Buyer Report, the average time it takes for an Australian couple aged 25-34 to save a 20% deposit for an entry-priced house is four years and nine months. In Sydney, it can take the same couple almost seven years to save a 20% deposit for an entry-level house. 

• Greater ongoing maintenance costs: On the topic of costs, houses are often more expensive to maintain compared to units and townhouses. As a homeowner, you’re responsible for the costs associated with maintaining the property, including landscaping, plumbing and structural repairs.

• Time commitment: Houses can also require a significant time investment. If you have a busy lifestyle or prefer to spend your time other than on home maintenance, a house might not be the best option for you.

Buying a townhouse

For some, a townhouse is a happy medium between buying a house and a unit. These typically provide more space compared to units, but they often don’t require as much maintenance as a freestanding home. Here’s how the pros and cons of a townhouse stack up.

Advantages

• Cost effective: Townhouses often provide a more affordable entry into the property market compared to standalone houses. This can be attractive for first-time buyers or those looking for a more budget-friendly option.

• Low maintenance: Townhouses typically have smaller outdoor spaces and shared common areas, reducing the maintenance burden on homeowners. This can be a bonus for those with busy lifestyles or looking for a low-maintenance living option.

• Shared amenities: Many townhouse developments come with shared amenities like swimming pools, gyms and communal spaces. Homeowners can enjoy these facilities without full responsibility of having to maintain the spaces themselves.

Disadvantages

• Strata fees: Many townhouses fall under strata title, which means homeowners are generally required to pay regular strata fees. These fees cover shared expenses like maintenance of common areas, insurance and administration costs. It’s important to factor these ongoing strata fees into your budget.

• Limited flexibility: Homeowners in a townhouse complex could have restrictions on some modifications or renovations because they often require approval from the homeowners' association or strata management. This can limit your ability to upgrade or personalise the property.

• Limited appreciation potential: While townhouses can appreciate in value, they might not experience the same level of appreciation as standalone houses or land. The potential for capital growth tends to be influenced by the overall property market and location.

Buying a unit

While buying a unit isn’t for everyone, it can be a great choice if your priority is securing a central location without the price tag that comes with a standalone house. The time it takes to save a 20% deposit for an entry-level unit is significantly shorter than saving for an entry-level house. According to data from Domain’s First Home Buyer Report, a first-home buyer could purchase an entry-priced unit 18 months sooner than a house across the combined capitals. 

Here’s a snapshot of the pros and cons of buying a unit.

Advantages

• Location and accessibility: Units are often located in central areas with easy access to amenities, public transport, schools and entertainment precincts. This can be a convenient option and reduce commuting time if you spend a lot of your time in the city.

• Low maintenance: Like townhouses, units typically require less maintenance compared to houses, with external maintenance, landscaping and common areas often managed by the body corporate or strata management. This is a great perk for those with busy lifestyles or who prefer a low-maintenance living arrangement.

• Compact design: Units are generally designed with space efficiency in mind, making them suitable for individuals, couples or even small families. Plus, modern unit designs often incorporate contemporary features and layouts.

Disadvantages

• Noise and privacy: Units often share walls with neighbouring units, which can lead to increased noise levels and reduced privacy compared to standalone houses. Soundproofing measures can vary, and living in proximity to others may affect the overall living experience.

• Rules and restrictions: Living in a unit complex often means adhering to community rules and restrictions imposed by the body corporate or strata management. These rules can cover aspects such as pet ownership, noise levels and external modifications.

• Strata fees: Like townhouses, units are often part of strata or body corporate arrangements, and owners can be required to pay regular strata fees. These fees cover shared expenses including maintenance of common areas, building insurance and admin costs. These fees can add to the overall cost of unit ownership.

Whether you’re weighing up a house, townhouse, or unit, each of these property types offers its own set of advantages and disadvantages. It’s up to you to weigh up the pros and cons of your options to find the property that suits you best.

Whether you’re looking to buy or refinance to purchase an investment property, Unloan is here to help. Sign up for early access to our brand-new buy a home offering or explore the great features on offer with our refinance product.

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This article does not have regard for the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this, consider the appropriateness to your circumstances.   

‍Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval; satisfactory security and you must have a minimum 10% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000. 

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

There are no fees from Unloan. However, there are some mandatory Government costs depending on your state when switching your home loan. For convenience, Unloan adds this amount to the loan balance on settlement.

* Other third-party fees may apply. Government charges may apply. Your other lender may charge an exit fee when refinancing.