Apartments, Villas or Houses – What's the Best Investment in the Illawarra?

TL;DR

• There is no single "best" investment type — performance depends on strategy, location and planning context.

• Houses typically deliver stronger long-term capital growth due to land value and scarcity.

• Villas and townhouses offer a balance of growth, lower maintenance and broad tenant appeal.

• Apartments can deliver higher yields but carry greater supply and planning risk in some pockets.

• Local zoning, supply pipelines and owner-occupier demand are critical when choosing the right asset.

• A buyer's agent helps align property type with long-term portfolio goals.

Who this article is for:

• First-time investors choosing an entry strategy

• Investors comparing Yield vs. growth

• Buyers relocating to the Illawarra

• Anyone weighing apartments, villas and houses as an investment option

One of the most common questions investors ask is deceptively simple: Should I buy an apartment, a villa, or a house?

In the Illawarra, the answer isn't universal. Each property type performs differently depending on the suburb, planning controls, supply levels and buyer demand. Investors who focus solely on Yield or headline affordability often miss the bigger picture — and that's where long-term performance is won or lost.

This article breaks down how apartments, villas and houses perform as investments in the Illawarra, using local planning insight and Market fundamentals rather than hype.

1. Houses: Land Value, Scarcity and Long-Term Growth

From a long-term perspective, houses have historically delivered the most substantial capital growth — and the Illawarra is no exception.

Why Houses Perform Well

The primary driver of house performance is land value. Land is finite, particularly in coastal- and escarpment-constrained regions such as the Illawarra.

Over time, it is land—not the dwelling—that appreciates the most.

Key advantages include:

• direct ownership of land

• scarcity in established suburbs

• strong owner-occupier demand

• renovation and subdivision potential (subject to zoning)

Suburbs such as Woonona, Corrimal, Figtree, Bulli and Albion Park consistently demonstrate this pattern, particularly for family-sized homes.

Planning Insight: Zoning Matters

Many Illawarra houses are located in low-density residential zones.

This typically limits density, preserves streetscape character, and prevents oversupply.

Where zoning permits dual occupancy or subdivision, houses may also offer future development upside — but only where minimum lot sizes, Access, and services permit.

This optionality adds long-term value, even if development is never pursued.

Trade-Offs to Consider

Houses generally require:

• higher entry costs

• higher maintenance budgets

• potentially lower rental Yield relative to price

For investors focused purely on cash flow, houses may feel less attractive initially — but over more extended holding periods, growth often outweighs early Yield differences.

2. Villas and Townhouses: The Middle Ground

Villas and townhouses often sit in the "sweet spot" for Illawarra investors seeking balance.

Why Villas Appeal to Investors

Villas and townhouses typically offer:

• lower entry prices than houses

• lower maintenance than freestanding homes

• stronger owner-occupier appeal than many apartments

• stable rental demand from families and downsizers

They perform exceptionally well in suburbs where freestanding houses are increasingly unaffordable.

Illawarra Examples

Villas and townhouses in Figtree, Corrimal, Shellharbour and parts of Wollongong attract both owner-occupiers and investors. This dual demand base supports price stability and resale liquidity.

Importantly, many villa complexes are small, boutique developments — which limits oversupply risk.

Planning and Supply Considerations

Most villas are subject to R3 Medium Density Residential zoning.

While this allows greater density, many established complexes are already fully built out, which may limit the supply of new competitors.

However, investors should carefully review:

• strata costs

• sinking fund health

• future redevelopment potential

• overall condition of the complex

Well-selected villas often outperform expectations — but poor strata management can quickly erode returns.

3. Apartments: Yield, Affordability and Supply Risk

Apartments are often the most accessible entry point for investors — but they require the most careful analysis.

Where Apartments Perform Well

Apartments can perform strongly when:

• located near employment hubs

• supported by universities or hospitals

• Supply is limited or tightly controlled

• owner-occupier demand exists

In the Illawarra, areas near Wollongong CBD, the hospital and UOW continue to show reliable rental demand.

The Key Risk: Oversupply

Apartment performance is heavily influenced by planning controls and development pipelines.

In pockets where zoning encourages high density and multiple projects are approved simultaneously, capital growth can stall.

This is why two apartments in the same suburb can perform very differently depending on:

• building quality

• age and design

• number of similar developments nearby

• owner-occupier vs investor ratio

Strata and Long-Term Costs

Apartments often come with:

• higher strata fees

• lift and common-area maintenance

• Less control over future costs

These expenses don't always show up in headline Yield figures, but they materially affect long-term net returns.

Local Insight: What Actually Performs Best in the Illawarra

Across the Illawarra, long-term performance is less about property type and more about location quality, supply control and buyer demand.

Broadly speaking:

• Houses tend to lead in capital growth

• Villas/townhouses offer balanced performance

• Apartments deliver Yield but require careful selection

The strongest portfolios often include a mix — rather than committing to a single asset type.

Choosing the Right Property Type Comes Back to Strategy

The "best" investment depends on:

• Your borrowing capacity

• cash flow tolerance

• risk profile

• time horizon

• future portfolio plans

The first investment should support your second, not limit it.

This is where many investors go wrong: choosing based on affordability alone rather than long-term flexibility.

Why Planning Insight Matters More Than Ever

Zoning, density allowances and future supply pipelines shape returns over decades.

Two properties with identical yields today can perform very differently depending on what can be built around them tomorrow.

Understanding Illawarra planning controls—suburb by suburb—is one of the most underappreciated advantages for investors.

Thinking About Investing in the Illawarra?

Choosing between an apartment, villa, or house isn't about following a rule — it's about aligning the asset with your long-term strategy and local conditions.

At The Shoreline Agency, we help investors:

• Compare asset types objectively

• Assess planning and supply risk

• Identify suburbs with long-term demand

• Evaluate Yield vs. Growth Trade-offs

• Buy with clarity and confidence

📞 Contact The Shoreline Agency to discuss which property type best suits your investment strategy.📧 joel@theshorelineagency.com.au

See you on the Shoreline.