Of course entry costs can be a tough hurdle in cities like Sydney or even Brisbane and the holding costs on expensive houses can be painful, despite forthcoming record low mortgage rates.
This is why most investors look at units and apartments in Sydney, but a glance at quarterly movements in median unit prices should immediately tell you that you need to be careful what you buy if you want to secure solid returns.
As a very general rule, the more your apartment block is similar in nature to a house (i.e. smaller apartment buildings with lots of land value and not too many individual units), the better.
On the other hand, the more your apartment looks like a skyscraper, the more likely you will also be scraping together paltry returns in the same way that investors in outer suburbs and many regional areas have been since Australia hit peak household debt in 2006.
Median capital growth on units can often appear to be quite inferior, but if you have owned the right type of Sydney property, you should have seen exceptionally good returns in recent years - asset selection is absolutely the key.
Is There Another Way?
Is this unfair and skewed towards those of us who bought inner city properties years ago or those who can afford to do so now?
We shouldn't all need to live in a handful of suburbs, of course, and there is a solution which is more investment in regional business, jobs, transport and infrastructure, but if we all keep trying to buy houses in the same few areas, prices will inevitably go higher (and human nature is surprisingly predictable in this regard, with some years of practice).
Instead Australia is adopting precisely the opposite approach to what is needed with jobs growth and population growth increasingly focused on the inner and middle-ring areas of our largest four capital cities, as concluded by independent studies carried out by the Grattan Institute, AHURI, the Reserve Bank and countless others.