Market breakdown highlights investment opportunities
15 May 2024"The unit market can be broken down into four main types and the returns vary across the categories. This month we’ve looked at which unit types currently offer the best investment potential."
As seen in Australian Property Investor Magazine.
For investors looking for rent price growth and yield, units generally outperform houses.
| Property type | Houses (Year to March 2024) | Units (Year to March 2024) | Houses (Year to March 2023) | Units (Year to March 2023) | Houses (Year to March 2019) | Units (Year to March 2019) |
| Median sale price | $625,000 | $425,000 | $550,000 | $400,000 | $497,000 | $393,000 |
| Median rent price | $600 | $550 | $520 | $450 | $360 | $325 |
| Yield | 5.0% | 6.7% | 4.9% | 5.9% | 3.8% | 4.3% |
However, the unit market can be broken down into four main types: villas, townhouses, units and apartments* and the returns vary across the categories. This month REIWA Research has looked at which unit types currently offer the best investment potential.
Rent price growth
When it comes to rent prices, villas recorded the strongest growth over the year to March 2024, rising 22.2 per cent to $550 per week. Over the longer term, units slightly outperformed villas, but both were significantly higher than townhouses and apartments.
Median weekly rent
| Property type | Year to March 2024 | Year to March 2023 | Year to March 2019 | 1-year change | 5-year change |
| Apartment | $560 | $475 | $350 | 17.9% | 60.0% |
| Unit | $450 | $380 | $260 | 18.4% | 73.1% |
| Townhouse | $650 | $550 | $400 | 18.2% | 62.5% |
| Villa | $550 | $450 | $320 | 22.2% | 71.9% |
| Unit market | $550 | $450 | $320 | 22.2% | 69.2% |
Days on market
The unit market has seen its median leasing time tighten marginally in the past year, dropping from 15 to 14 days. Villas were the fastest leasing unit type in both 2024 (13 days) and 2023 (14 days).
You can see the effect demand is having on the market when you look back to leasing days recorded during Perth’s extended downturn. In March 2019, units as a whole leased in a median of 35 days, 21 days longer than we’re seeing now. Townhouses were the top performer then, leasing in a median of 33 days.
Median time to lease (days)
| Property type | Year to March 2024 | Year to March 2023 | Year to March 2019 | 1-year change | 5-year change |
| Apartment | 15 | 16 | 35 | -1 | -20 |
| Unit | 14 | 15 | 36 | -1 | -22 |
| Townhouse | 15 | 16 | 33 | -1 | -18 |
| Villa | 13 | 14 | 36 | -1 | -23 |
| Unit market | 14 | 15 | 35 | -1 | -21 |
Yield
When we look within the unit market, villas are currently the top performer with a yield of 6.6 per cent. They also provided the highest yield in 2023 and 2019.
Yield March 2024
| Property type | Apartment | Unit | Townhouse | Villa |
| Annual median sale price | $510,000 | $380,000 | $600,000 | $435,000 |
| Rent | $560 | $450 | $650 | $550 |
| Yield | 5.7% | 6.2% | 5.6% | 6.6% |
Yield March 2023
| Property type | Apartment | Unit | Townhouse | Villa |
| Annual median sale price | $499,000 | $360,000 | $565,000 | $380,000 |
| Rent | $475 | $380 | $550 | $450 |
| Yield | 4.9% | 5.5% | 5.1% | 6.2% |
Yield March 2019
| Property type | Apartment | Unit | Townhouse | Villa |
| Annual median sale price | $515,000 | $335,000 | $520,000 | $338,000 |
| Rent | $350 | $260 | $400 | $320 |
| Yield | 3.5% | 4.0% | 4.0% | 4.9% |
REIWA Research has previously broken down the unit market for sales, and villas were the top performer for median sale price growth – their prices are currently at their peak - and days on market.
Historically Perth has had a love affair with houses; we tend to like to have our own patch of land. However, competition for houses is high and prices are rising strongly. Villas are a more affordable option for home buyers and usually provide that ‘land’ in the form of private courtyards. They also usually have their own garage/carport, rather than the central parking you find in apartments and some unit complexes. This convenient feature also appeals to buyers.
The features that attract home buyers are transferrable to the rental market, with many tenants potentially seeking to have their own piece of private ‘land’ where possible.
The data suggests villas are a good opportunity for investors. While the demand for these homes is there, villas make up a fairly small proportion of leases and also sales, indicating there is a need to build more of this type of medium-density housing in Perth.
As always, this is general information and should be used as a guide. Investors should do their own research as outcomes can vary from suburb to suburb.
* Definitions:
Villa: Single-level dwellings with their own private grounds. They are in a multi-residential complex and have no other dwellings above or below.
Townhouse: Two/three-storey dwellings with their own private grounds. They are in a multi-residential setting and have no other dwelling above or below. They are either attached in some structural way to one or more dwellings or are separated from neighbouring dwellings by less than half a metre.
Unit: Single-level dwellings in a multi-residential setting where the complex is no more than two storeys.
Apartment: Dwellings with no private grounds in a multi-storey complex and usually share a common entrance, foyer or stairwell. Apartment complex’s generally have lifts and common amenities such as a pool, gym or garden.
