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Sydney Units Offering Higher Rental Yields Than Houses

high rental yieldA shift in lifestyle choices has contributed greatly towards the increasing popularity of units in Sydney. Presently, they have become the premier choice of dwelling hunters, surpassing the traditional craze for houses. An article on the website news.com.au talks about the shift in consumer preference and the reason behind it.

Buyers prefer small units requiring less upkeep

About a decade or so ago, buyers looked for big houses with gardens and porches, but today, they look for small unit apartments which call for less maintenance. Such units offer the luxury of living close to major transport links, consumer hubs and basking in the cafe lifestyle.

Higher rental yields for units

Once ignored by tenants, units are enjoying higher rental yields today. An investor loves them because it allows him to subsidise his mortgage liabilities. After all, higher rental yield means they can ask for rents that constitute of higher percentage of the sale price.

Investors gain from positive cash flow

Owner-occupiers have always been in favour of houses but investors have had a soft spot for units since the dawn of  regulated property market. Today, they can declare their love because finally, there is positive cash flow to be had through investment in units. Why wouldn’t investors be euphoric when rents cover more than their monthly mortgage?

Rental yield in Sydney among the highest for a majority of suburbs

28 suburbs in New South Wales exhibit very high rental yields. Interestingly, they are all in Sydney. This has got a lot to do with land supply shortage here. Paucity of supply pushes demand resulting in hiked rents.

Rental yield value for houses score an average of 5.49%, which is about 3/4th of what the units in Sydney propose.

In case you had missed pondering over it, units also reduce your land tax liabilities.

You can read the original article here.

Unit-hunting to become an even bigger craze

To my mind, the trend will only strengthen as people look to shift completely from regional areas and McMansions of the past. Already, the much cherished waterfront properties are being given a thumbs down by buyers. All they want is a living space close to the urban epicentre of capital cities.

They do not mind cramped spaces till the time they get hold of all the amenities. This paradigm shift, in times to come, will only make unit-hunting a bigger craze.

Which one do you personally back- houses or units?