Units Investments
Units are seen as riskier than house investments at the moment. Image – Canva.
  • Investment in units are three times as risky in some capital cities than houses
  • 55% experts believe relaxing lending regulations could lead to a "mortgage time bomb"
  • RBA will likely hold the cash rate at 0.10% through 2022, 2023 and perhaps into 2024

According to new research from the online comparison site Finder, investors should steer clear of investing in units, as compared to houses.

Among forty economists and property experts who weighed in on the issue, more than 60% agreed that units in Melbourne, Brisbane and Sydney were a “risky investment”.

From the same group, only a quarter or so thought investing in houses was uncertain.
This suggested that, despite the property boom, investors had to be wary.

Finder RBA Cash Rate Survey

Finder RBA Cash Survey
Predictions from 19-23 economists. Source – Finder.

“Not only has the median house price in Sydney passed $1 million for the first time since 2017, but owner-occupier borrowing hit $20 million for the first time in history in December,” said Graham Cooke, Head of Consumer Research at Finder.

“Despite this boom, rent prices have struggled. There are a number of factors for this, including millions of renters who lost jobs or had hours reduced, and a lack of long-term international visitors and students.

“If you have a deposit saved and are deciding between investing in a unit or a house, it’s worth keeping this outlook in mind,” he said.

Lending and Debt

The panel was split on whether lifting responsible lending regulations would lead to an unstable amount of debt in the country.

“There is an implicit assumption forming that property prices won’t fall and it is fine to gear up. Same as 2008, and many previous speculative bubbles,” said Mark Crosby of Monash University

The problem here is, as Peter Boehm of CLSA Premium noted, “when interest rates start to rise … a mortgage arrears time bomb will be released.”

Christine Williams of Smarter Property Investing said that there are already too many unsecured lenders, (such as Afterpay and Zip) undermining the responsibility of paying down debt.

“Banks will become less concerned about [the] ability to repay mortgages in an effort to increase market share,” said Craig Emerson of Emerson Economics.

On the other side of the argument, just under half the experts argued that current regulations are too onerous and are hurting both borrowers and lenders.

“While the economy has recovered faster than expected, the RBA is still a long way away from meeting its inflation and employment goals, so a rate hike is still a long way away,” said Shane Oliver of AMP Capital

“That said, the faster than expected recovery will likely see the first hike occur earlier than the RBA’s expectation of no increase before 2024. It could come late next year or early 2023.”


Before investing in any asset, please do your own independent research, taking into account your own personal financial situation. This article does not purport to provide financial advice. See our Terms of Use.

You May Also Like

New laws attract overseas investors for build-to-rent housing

Laws lowered to incentivise foreign build-to-rent deals, growing Australia’s rental stock.

Japanese capital dominates Australian property investment

Japanese investment surged to over $2 billion as top Australia offshore buyers in 2023.

Australian property investing: Know when to hold them, know when to fold them

There are a wide range of factors to consider.

ATO to crack down on property investors through data-matching

Nine in ten rental property owners are getting their tax returns wrong

Top Articles

PropertyGuru Asia Property Awards (Australia) returns for its 7th edition, including several brand new award ...

This year's awards include several brand new categories, with entries closing 2 August 2024.

Rentvesting in Australia: A deep dive

Rentvesting offers an alternative path into the property market for priced-out first-time buyers.

Housing crisis survival guide: How to buy your first Australian property

Three property experts give the low down on how to nab a home in this tough housing market.