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Jeremy Sheppard Blog post by Jeremy Sheppard

Why do we consider Unit to House Value Comparison in our Location Research?

Hi I’m Jeremy Sheppard and I’m talking about Unit to House Value Comparison. This is one of the metrics we use in our research to help uncover top growth locations for our clients to invest in.

The Unit to House Value Comparison, or U2H as we abbreviate it, is a measure of the imbalance between prices of units and houses in the same suburb.

Now to avoid confusion, let me just define what we consider to be a unit and a house: obviously, if it’s marked for sale as a unit, then it’s a unit and that includes apartments. A house would be a townhouse of three bedrooms or more, or a villa or a terrace of three bedrooms or more. If it only has two bedrooms, then we classify that as a unit because it’s more likely to represent the qualities of a unit, especially when it only has two bedrooms.

If we’re scouring the U2H for units, the score is higher if units are good value, with respect to houses.

So, let’s say houses are worth $1 million and a unit in the same suburb is only worth $300,000, then a unit, you’d expect, would be good value for money. The reverse can also be true, where houses and units are very similarly priced. So if a house is worth $500,000 and the unit in the same suburb is worth $400,000, then a house is good value for money.

We’re taken into consideration bedroom count, bathroom count, parking spaces, block size, internal floor space of the unit and house — so we take into account a number of different factors here when we’re trying to calculate the U2H.

Now it’s not a precise indicator — it really is just an identifier of the potential for a market to rebalance — and it’s not the only indicator we use There are a lot more indicators we us, so if you’re interested in learning more about them check out our research page.

Thanks very much for watching and please leave comments:

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