Investing in property is a common strategy Australians use in the hope of building long-term wealth. But in 2025, with so many choices on the table, deciding between a house, a unit, or a townhouse can feel overwhelming. Each option has its own pros, drawbacks and financial considerations. And when you’re also weighing up borrowing limits, interest rate changes and market uncertainty, it’s easy to feel unsure about where to start.
In this guide, Q Financial will help you compare houses, units and townhouses as investment options in 2025. We’ll look at how current market trends could influence your decision and show you how the right mortgage support can give you clarity and confidence, from understanding your borrowing power to choosing a loan that suits your goals.
When you’re ready to build a real estate portfolio, partnering with a seasoned Investment Property Mortgage Broker ensures your finance strategy supports expansion now and into the future.
Start with Strategy: What Do You Want From Your Investment?
Before you start comparing suburbs or browsing floor plans, it’s important to get clear on what you want your investment to deliver. Your goals will shape not only the type of property you choose but also how you structure your finances.
Are you aiming for long-term capital growth?
Do you want reliable rental income to support your cash flow?
Is this your first step towards building a broader property portfolio?
Having a clear goal in mind can help you stay focused and make it easier to identify the type of property that best suits your needs. A clear investment strategy gives you direction, helping you assess opportunities with more confidence and make decisions that align with your financial goals.
What’s the Difference Between a House, a Unit and a Townhouse?
Before we dive into how each performs as an investment, it’s important to understand what sets them apart.
1. House
A standalone property where you own both the land and the building. Houses are usually larger, offer more privacy, and give you full control over the land. They often come with a backyard and may suit families or long-term tenants.
2. Unit
Typically part of an apartment complex. You own the individual apartment and share common areas like hallways and lifts under a strata title. Units are generally more affordable and have lower maintenance, but they come with ongoing strata fees and restrictions on changes.
3. Townhouse
A multi-level property that shares one or more walls with neighbouring dwellings. Most townhouses have a private entrance, a garage, and a small courtyard. Ownership may fall under strata or Torrens title, depending on the development.
Each type of property varies in price, responsibilities, growth potential, and holding costs. Understanding these differences may help you make a more informed investment decision.
Houses: More Land, More Control, and Long-Term Potential
Freestanding houses remain a popular choice for investors in 2025, especially those focused on long-term capital growth. A key reason is the value of the land, which tends to appreciate more consistently over time than the structure itself.
| PROS | CONS |
| Greater land value that may support future growth | Higher purchase prices and maintenance costs |
| Flexibility to renovate or extend | Lower rental yields in some areas |
| Strong appeal for families in suburban areas | Vacancy periods may be longer in low-demand locations |
Units: Lower Cost, Less Maintenance, More Rental Appeal
Units are often a more affordable way for investors to enter the property market and may involve lower ongoing maintenance. However, not all units are equal. Building quality, strata fees, and local supply levels can affect both rental returns and long-term value.
| PROS | CONS |
| Lower upfront costs and easy to maintain | Strata fees can reduce overall returns |
| May offer higher rental yields in inner suburbs | Limited renovation potential |
| Appeal to students, professionals and downsizers | Lender restrictions may apply to certain unit types |
Townhouses: A Balanced Option for Space and Value
Townhouses are becoming an increasingly appealing option, especially for those wanting a balance between space, affordability and low maintenance. They can offer more flexibility than a unit without the larger price tag of a house, making them a strong contender for investors.
| PROS | CONS |
| Often more affordable than freestanding houses and more spacious than units | Usually part of a strata or community title, which can involve ongoing fees |
| Typically easier to maintain, with fewer upkeep costs | Smaller land component compared to detached homes |
| Attractive to families and renters who value a suburban lifestyle | May offer less scope for renovations or extensions |
What Will It Cost You to Buy and Hold?
The cost of an investment property includes more than just the purchase price. Houses, units, and townhouses all come with different upfront and ongoing expenses, which can affect your cash flow and investment strategy.
1. Upfront Costs
Houses generally require a larger deposit and higher stamp duty due to their higher price point. Units and townhouses are usually more affordable, making them easier to enter into or add to a growing portfolio.
2. Ongoing Costs
Units and townhouses often include strata levies that cover shared maintenance and insurance. Houses avoid these fees but place full responsibility for upkeep on the owner. While not always regular, repair costs for things like roofing or plumbing can add up over time.
3. Finance Considerations
Small units, particularly studios under 50 square metres, may face stricter lending criteria, including higher deposit requirements or limited loan options. Larger townhouses and houses are usually more acceptable to lenders, offering greater flexibility and potentially more competitive rates.
Depreciation and Tax Benefits
Newer units and townhouses often come with strong depreciation benefits. You may be able to claim deductions for construction costs, as well as wear and tear on items like carpets, appliances, and window coverings. These deductions are usually higher in the early years and can help improve your cash flow after tax.
Older houses tend to offer less depreciation value unless they’ve been recently renovated. However, if you plan to upgrade the property, you may be able to create new deductions while also boosting its rental appeal and long-term value.
Negative gearing is available for many types of investment properties. Depending on your financial situation, you may be able to claim expenses such as interest, maintenance, and property management fees against your income. The benefits will vary based on your cash flow, loan structure, and overall investment strategy.
Where Should You Buy Each Type?
The best location for your investment often depends on the type of property you choose and what you want to achieve.
1. Houses
Freestanding homes often perform well in outer suburbs and regional areas where land is more affordable and demand is growing. These locations appeal to families looking for space, especially where new infrastructure or community developments are planned.
Outlying suburbs of major cities and established regional centres like Geelong, Newcastle and Toowoomba continue to offer value. These areas often provide more space, affordable price points and improved infrastructure that can support future growth.
2. Units
Apartments are often a practical option in inner-city areas and nearby suburbs that provide easy access to public transport, universities, and major employment centres. These areas tend to attract strong rental demand, although oversupply in some locations may put pressure on both rental yields and long-term growth.
Units in well-connected suburbs such as South Brisbane, Box Hill in Victoria or Parramatta in New South Wales may continue to attract tenants and offer steady income potential, particularly where local infrastructure and amenities support ongoing demand.
3. Townhouses
Townhouses are becoming a more popular option in outer and established suburban areas where detached houses are becoming less affordable. These locations often offer convenient access to shops, schools and public transport, making them attractive to downsizers, couples and small families who want more space than a unit without the maintenance of a full-sized house.
Growing suburbs like Tarneit in Melbourne’s west and Marsden Park in Sydney are seeing more townhouse developments as infrastructure expands. These areas may appeal to both renters and buyers looking for a balance between affordability, comfort and lifestyle.
For educators, who often prefer stable, family-oriented locations, townhouse investments can be a natural fit. With a teacher home loan, teachers can access lending pathways that recognise their career stability and allow them to purchase in suburbs with strong community infrastructure.
Buying a property in a location that does not align with your goals or tenant demand could affect your potential returns. Our mortgage brokers on the Gold Coast can help you focus on high-potential suburbs. Contact us today to get started.
How Property Type Affects Your Loan
When applying for an investment loan, lenders consider more than just your income. They also look at the property you plan to buy, and the type of property can influence how much you can borrow, the deposit you need, and the terms of the loan. Lending criteria can vary not only by property type but also by profession. For example, medical professionals may benefit from tailored lending packages such as a home loan for doctors, which can offer reduced deposit requirements and waived LMI. This flexibility can make it easier to secure investment properties in high-demand suburbs close to hospitals and universities.
Properties such as small studio apartments, off-the-plan purchases, or those in large apartment complexes are often seen as higher risk. As a result, lenders may ask for a larger deposit, offer a lower loan-to-value ratio, or reduce the amount they are willing to lend. Some lenders also have minimum size requirements or may avoid lending on properties in areas where there is an oversupply.
In comparison, houses and townhouses in established suburbs are often viewed as more stable, which could result in more flexible lending conditions. Knowing how property type affects your borrowing power can help you make more informed choices when planning your investment.
Secure the Property That Suits Your Strategy with a Smart Loan Structure
Deciding between a house, a unit, or a townhouse comes down to what you want your investment to deliver. Each property type has its own strengths depending on your goals, your budget and how involved you want to be. Whether you are aiming for long-term growth, steady rental income or building a larger portfolio, making the right choice early can set you up for better outcomes.
Just as important as the property itself is the way you choose to finance it. The right loan structure can support your cash flow, strengthen your borrowing capacity and give you more room to grow. This is where a mortgage broker can provide valuable support by helping you compare lenders, understand your options and match your loan to your investment strategy.
Let’s make your next investment decision a smart one. Contact Q Financial today and take the first step towards building a stronger property portfolio.
Investment Property FAQs (2025)
It depends on your strategy. Houses usually offer stronger long-term capital growth because of the land component, while units can provide higher rental yields in inner-city markets. Townhouses sit in the middle, offering a balance of affordability, space, and lifestyle appeal.
Yes — townhouses are increasingly popular in suburban growth areas where detached homes are less affordable. They attract small families, couples, and downsizers looking for space and convenience without the maintenance of a full-sized house. In 2025, many developers are prioritising townhouse projects in high-demand corridors like Tarneit (VIC) and Marsden Park (NSW).
Yes. Lenders often view houses and larger townhouses as lower risk, which can mean better loan-to-value ratios and borrowing terms. Small studio apartments or off-the-plan units may require higher deposits or face stricter criteria. Tailored options for certain professions can also help, such as home loans for doctors (https://www.q-financial.com.au/helping-doctors/) and teacher home loans (https://www.q-financial.com.au/helping-teachers/).
Units in inner-city or university-adjacent areas often achieve the highest rental yields, while houses in outer suburbs tend to focus more on long-term growth. Townhouses usually offer steady yields while appealing to a wide tenant base, balancing both income and growth potential.
Many first-timers choose units or townhouses due to lower entry costs and simpler maintenance. If your goal is long-term equity growth and you can afford higher holding costs, a house in a growth corridor may suit better.
Strata levies pay for shared areas, insurance, and sinking funds. They reduce net yield, so factor them into cash-flow projections. Well-managed buildings with healthy sinking funds can prevent large special levies later.
Many lenders have minimum internal size guidelines (for example, 50 m² excluding balconies and car spaces). Smaller studios can face lower LVRs, higher deposits, or restricted lender choice.
Newer properties can offer stronger depreciation benefits and lower immediate maintenance, while established homes may provide renovation upside and larger land components. Avoid oversupplied high-rise pockets where values and rents can stagnate.
Interest-only can improve short-term cash flow but costs more interest over time. Principal-and-interest reduces debt and risk sooner. The right choice depends on your tax position, risk tolerance, and portfolio plan — speak with a broker before deciding.
Landlord insurance (loss of rent, tenant damage, liability) plus building and contents where applicable. For units, the strata policy usually covers the building shell; you still need contents/landlord cover for your lot and liability.
Updated in August 2025
