Are Australia apartments better investments than houses?

Authored by the expert who managed and guided the team behind the Australia Property Pack

Everything you need to know before buying real estate is included in our Australia Property Pack

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Australia. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At BambooRoutes, we explore the Australian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Sydney, Melbourne, and Brisbane. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

How have apartment prices in major Australian cities grown compared to house prices over the past 10 years?

Houses have significantly outperformed apartments in capital growth across most major Australian cities over the past decade.

In Sydney, house prices rose 81.9% compared to just 28.4% for apartments between 2015 and 2025. Melbourne showed a similar pattern with houses gaining 59.7% while apartments increased only 24.2%.

Perth demonstrated the largest gap, where houses appreciated substantially while apartments remained relatively flat. Brisbane was the exception, showing stronger apartment performance with units gaining 67.6%, though houses still outpaced them at 108%.

As of September 2025, this trend is beginning to shift. Recent data shows 63% of apartment market segments are now posting equal or higher median price growth than houses, particularly in Brisbane and Perth where apartments are catching up rapidly.

It's something we develop in our Australia property pack.

What are the current average rental yields for apartments versus houses in Sydney, Melbourne, Brisbane and Perth?

Apartments consistently deliver higher rental yields than houses across all major Australian cities as of September 2025.

Sydney apartments currently offer gross rental yields of 4.0% compared to 2.7% for houses. Melbourne apartments yield 4.7% versus 3.1% for houses, while Brisbane apartments provide 4.8% compared to houses at 3.5%.

Perth shows the highest yields for both property types, with apartments delivering 5.9% and houses offering 4.2%. This yield advantage for apartments typically ranges from 1.3 to 1.7 percentage points across the major cities.

The higher yields reflect apartments' lower purchase prices relative to their rental income potential, making them more attractive for investors focused on immediate cash flow returns.

How do vacancy rates differ between apartments and houses across Australia's main property markets?

Vacancy rates are remarkably similar between apartments and houses across Australia's main property markets, sitting at historically low levels around 1.2% nationally as of May 2025.

Sydney maintains a vacancy rate of 1.5% while Melbourne sits at 1.7%, with both cities showing minimal difference between apartment and house vacancy rates. These low rates reflect strong rental demand driven by population growth and limited housing supply.

Brisbane, Perth, and Adelaide all report vacancy rates below 1.5%, indicating tight rental markets for both property types. The rental crisis affecting Australia has created strong demand for all accommodation types, regardless of whether they're apartments or houses.

This low vacancy environment benefits both apartment and house investors equally, providing confidence in rental income stability across property types.

What are the typical upfront purchase costs, including stamp duty, for an apartment compared to a house at the same price point?

Upfront purchase costs including stamp duty are essentially identical for apartments and houses at the same price point across Australia.

Cost Component	Apartments	Houses
Stamp Duty	4-6% of purchase price (state-dependent)	4-6% of purchase price (state-dependent)
Building Inspection	$400-800 (strata report required)	$400-800 (pest/building inspection)
Conveyancing	$1,200-2,500	$1,200-2,500
Loan Application	$300-600	$300-600
Registration Fees	$100-300	$100-300
Insurance	Lower (contents only)	Higher (building + contents)
Total (excluding stamp duty)	$2,000-4,200	$2,500-4,800

How do ongoing costs like strata fees for apartments compare with maintenance costs for houses?

Ongoing costs differ significantly between apartments and houses, with apartments featuring predictable strata fees while houses face variable maintenance expenses.

Apartment strata fees typically range from $2,200 to $10,000 annually, depending on building amenities, age, and location. These fees cover building insurance, common area maintenance, gardening, and management, providing cost certainty for investors.

Houses require maintenance averaging 0.4% to 0.75% of the property value annually. For a $1 million house, this translates to $4,000-$8,000 per year, but costs can spike unpredictably for major repairs like roof replacement or structural issues.

Apartments offer more predictable ongoing expenses, while houses provide direct control over maintenance decisions and timing, though with greater financial uncertainty.

What government incentives or tax benefits apply differently to apartments versus houses in Australia?

Government incentives largely apply equally to apartments and houses, but specific build-to-rent tax benefits significantly favor new apartment developments.

Build-to-rent apartment investments receive enhanced tax treatment including reduced withholding tax rates from 30% to 15% for foreign investors and increased annual depreciation from 2.5% to 4% for new properties.

First-home buyer incentives apply similarly to both property types, though some states offer additional concessions for off-the-plan or new-build apartments. Negative gearing and depreciation benefits work identically for both apartments and houses.

The build-to-rent incentives specifically target institutional apartment investment, making new apartment developments more attractive to large-scale investors and potentially improving long-term apartment market fundamentals.

It's something we develop in our Australia property pack.

How do population growth trends and migration patterns in cities affect the demand for apartments versus houses?

Australia's rapid population growth and international migration patterns strongly favor apartment demand in major cities.

International migrants typically settle in urban centers initially, creating immediate demand for apartments due to affordability and proximity to employment hubs. Australia's population is growing by approximately 400,000 people annually, with most settling in Sydney, Melbourne, and Brisbane.

Demographic shifts including smaller household sizes, aging population seeking downsizing options, and young professionals preferring urban lifestyles drive apartment demand. University students and temporary residents also predominantly seek apartment accommodation.

Houses remain preferred by established families and those seeking suburban lifestyles, but the sheer volume of new arrivals and urban workers creates sustained apartment demand pressure in city centers and transport corridors.

What are the resale values and capital growth prospects for apartments compared to houses in both inner-city and suburban areas?

Houses continue to demonstrate superior long-term capital growth prospects due to land value appreciation, but well-located apartments are showing improved performance.

Inner-city apartments near transport infrastructure and employment centers are experiencing stronger capital growth as density increases and land becomes scarcer. Suburban apartments, particularly those in established neighborhoods with good amenities, are also performing better than previously expected.

Houses benefit from land scarcity and ongoing subdivision restrictions, providing underlying value support. Owner-occupier demand for houses typically remains stronger, supporting resale values during market downturns.

As of September 2025, apartments in Brisbane and Perth are outperforming houses in recent price growth, suggesting the traditional gap may be narrowing in markets where affordability drives buyer behavior.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

How do banks and lenders treat apartments versus houses when assessing borrowing capacity and risk?

Banks generally view houses as lower-risk investments and offer more favorable lending terms compared to apartments.

Houses can typically secure loan-to-value ratios up to 95%, while standard apartments usually max out around 90%. Banks apply stricter criteria for small apartments (under 50 square meters), high-density developments, and off-the-plan purchases.

Serviced apartments, studio units, and properties in buildings with commercial components face additional lending restrictions or higher deposit requirements. Some lenders completely avoid certain apartment types or locations they consider oversupplied.

Interest rates for apartment loans may be 0.1-0.3% higher than equivalent house loans, and banks often require larger cash deposits for apartment purchases, particularly for investment purposes.

What infrastructure or urban development plans in Australia could boost the long-term value of apartments compared to houses?

Major infrastructure projects and urban densification policies are positioning apartments for stronger long-term growth in key corridors across Australian cities.

Transport infrastructure including Sydney Metro expansion, Melbourne's Suburban Rail Loop, and Brisbane's Cross River Rail create apartment-friendly development zones with improved connectivity. These projects typically boost apartment values more than houses due to density planning requirements.

Government urban infill policies prioritize medium-density housing development around transport hubs, creating favorable zoning for apartment construction while restricting suburban expansion. Adelaide and Western Sydney are prime examples of this strategic densification approach.

Mixed-use development mandates in city centers support apartment demand by creating vibrant urban communities where residents can live, work, and access services within walking distance, enhancing apartment lifestyle appeal and investment potential.

How do lifestyle preferences of buyers and renters in Australia impact the demand for apartments versus houses?

Lifestyle preferences are increasingly favoring apartments among specific demographic groups, while houses maintain appeal for traditional family buyers.

1. **Urban professionals and young adults** prefer apartments for proximity to work, entertainment, and public transport, reducing commute times and supporting car-free lifestyles2. **Downsizers and empty nesters** choose apartments for low-maintenance living, security, and access to amenities like gyms and pools3. **International students and temporary residents** predominantly rent apartments due to affordability and inner-city locations near universities and employment4. **Singles and couples without children** value apartment living for convenience, building amenities, and urban lifestyle benefits5. **Families with children** continue preferring houses for privacy, outdoor space, parking, and proximity to schools, maintaining strong house demand in suburban areas

It's something we develop in our Australia property pack.

What risks are more specific to apartments, like oversupply or building defects, compared to risks more common in houses, like land zoning changes or higher upkeep costs?

Apartments and houses face distinctly different risk profiles that investors must carefully consider.

**Apartment-Specific Risks:**1. **Oversupply risk** in high-density areas, particularly affecting new developments in outer suburbs2. **Building defects and construction quality issues**, especially in newer developments with potential cladding or waterproofing problems3. **Developer failure risk** for off-the-plan purchases, leaving buyers with incomplete or delayed projects4. **Strata management disputes** and unexpected special levies for major building repairs5. **Rental pool restrictions** in some buildings limiting short-term rental income potential**House-Specific Risks:**1. **Land zoning changes** affecting property use, density, or development potential2. **Unpredictable maintenance costs** including roof, plumbing, and structural repairs that can exceed $20,0003. **Natural disaster exposure** with full responsibility for flood, fire, or storm damage4. **Neighborhood decline** affecting individual property values more dramatically than apartment buildings5. **Higher vacancy impact** as single rental income loss affects 100% of property income

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Property Update - House Prices in Australia Over the Last 10 Years
2. RealEstate.com.au - Australia's Property Shift Units Now Outperforming Houses
3. Domain - The Type of Home That Rose Most in Price Over the Past Decade
4. Property Buyer - Are Apartments a Good Investment
5. Wise - Best Rental Yield Australia
6. SQM Research - National Vacancy Rates May 2025
7. Deximal - Property Market Analysis
8. CBP - Guide to Build to Rent Tax Incentives in Australia
9. Australian Taxation Office - Incentives to Increase Housing Supply
10. Reserve Bank of Australia - Housing Market Speech