Unit to House Value Comparison (U2H®)
What is the U2H?
U2H stands for Unit to House value comparison. The U2H is a score out of 100 representing the level of likely imbalance between the price of houses and units in a suburb.
Sometimes the price of units can get too high, making houses better value for money. The reverse is also possible. Good investing is quite often a case of capitalising on such imbalances.
The nature of properties is considered in the valuing technique:
- Bedroom count
- Bathroom count
- Parking spaces
- Internal size
- Land size
- And of course typical values
If the U2H is high for a unit market, it means they are good value compared to houses in the same suburb. Similarly, the U2H will be high for a housing market if prices represent good value compared to units in the same suburb. In other words, the score considers the property type of the market under examination.
If the U2H is around 50, it means neither property type is better value than the other. So, you'd favour the property type with the highest score.
Note that the U2H for houses plus the U2H for units in the same suburb will always add to 100. So, if the U2H for units is 60, then the U2H for houses in the same suburb will be 40.
Why is the U2H important?
The U2H can add weight to the potential a property market has to experience strong growth. It is another statistic that investors should consider.
Analysing a property market from every angle and seeing positive signs from all of them will give the investor more confidence about the nature of the market.
The U2H is one of the statistics incorporated into the DSR+.
Is the U2H reliable?
An accurate U2H requires:
- A large sample size of properties
- Reasonably consistent quality and nature of each property type
If a market is thinly traded or if there is a varied mixture of 1, 2 and 3 bedroom apartments or houses on acreage mixed with houses on small blocks, good streets and bad streets, with or without views, then the U2H figure can become inaccurate. It is rare for a market to have tremendous consistency in features and aspects for all houses and units. Check the nature of properties of each type closely on real estate listing websites to see gauge the degree of uniformity.
Base data and other sources
Some alternative sources for this kind of data include: