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“Buy land, they’re not making it anymore” Mark Twain
Among Twain’s many quotable lines, none bare more significance in the world of real estate than “buy more land, they’re not making it anymore”. This article dives into the relevance of that quote today and how the breakthrough mass production of steel in 1856 allowed developers to build upwards for the first time – prompting todays investors to ask: Should I invest in apartments or land?
Throughout history, wars and conflicts have been driven, at least in part, by disputes over land and property. Albeit, on a larger scale to the individual investor, however, control of territory has often equated to power, resources and strategic advantage. From the Roman conquest, driven by the expansion of land and influence (117 AD) to the modern-day conflict between Russia and Ukraine, largely influenced by control over land and geopolitical positioning. Property has long played a foundational role in investment strategies, offering tangible value in building an investment portfolio that prospers in all economic seasons.
Why are houses better for capital gains?
Land holds value. Theres a limited supply of land, as population grows and demand increases, it becomes more valuable. This directly benefits houses more than units because the land component is a larger proportion of the houses total value.
Henry Bessemer, the British engineer developed the first inexpensive industrial method for mass producing steel from molten pig iron. This innovation revolutionised construction and manufacturing – enabling the rise of skyscrapers and modern infrastructure.
Despite the ever increasing supply of units, Mark Twain’s reminder holds true… they aren’t making any more land.
Why are units better for cash flow?
Rental income is closely tied to the number of bedrooms, rather than the land size.
Tenants typically choose a property based on how many people it can accommodate – not the size of land that it sits on.
This means that a 2 bedroom unit and a 2 bedroom houses in the same suburb often command similar weekly rent.
Houses cost significantly more to purchase but don’t earn proportionally more rent, which weakens their rental yield and cash flow performance.
Summary
The data clearly demonstrates that houses have consistently outperformed units in both long – term and recent growth across key suburbs. Despite tax disincentives and policy pressures – particularly evident in Melbourne – houses continue to offer stronger capital gains. This is because the fixed supply of land contrasts with the increasing supply of units.