Apartments vs Houses: Are Units the Smarter Investment in 2025?

Investing in an apartment can be a smart move – but only if you do your groundwork first. For a long time, the conventional wisdom has been that houses always outperform apartments when it comes to capital growth.

But a new report suggests the game has changed. In fact, in 62.9% of Australian markets, apartments matched or even outpaced houses in price growth over the 12 months to May 2025.

So, are apartments the hidden gem of property investment? Let’s take a closer look.

Why Apartments Are Gaining Ground

Traditionally, investors believed that the real value was in the land – meaning houses had the upper hand. But according to Michael Wilkins, director of property at Nuestar, that’s no longer the case.

“With lifestyle benefits, lower costs and outstanding locations, apartments are fast becoming the preferred choice for both homeowners and investors,” Wilkins explains.

Some of the reasons behind the shift include:

Affordability: Apartments cost less than houses, making them more accessible.
Location: Many are situated in prime urban areas near jobs, transport, and lifestyle hubs.
Lifestyle perks: Amenities like gyms, pools, and added security can make them more attractive to buyers and tenants alike.

Brisbane Leading the Charge

One standout city is Brisbane, where 76.3% of apartment markets outperformed houses in the year to May 2025.

According to Terry Ryder from Hotspotting, Brisbane’s apartment boom is being fuelled by:

Major infrastructure projects
Strong population growth
The upcoming 2032 Olympics

Ryder believes unit prices in key areas will continue to climb as tight vacancy rates and rising rental demand drive further growth.

The Affordability Question

Australia’s housing affordability crisis is one of the biggest drivers behind the shift toward apartments.

The Demographia International Housing Affordability Report ranks Australia as the second least affordable country in the world for housing, with prices at 9.7 times average incomes. For context:

Hong Kong: 14.4x
Australia: 9.7x
UK: 5.6x
US: 4.8x

With house prices in Sydney hitting a median of $1.55 million, units at around $858,000 are offering a more accessible entry point for both first-home buyers and investors.

The Downsides: Strata Fees & Levies

Of course, apartments aren’t without their pitfalls. The biggest one? Strata fees.

While these fees are necessary for maintenance and insurance, there are concerns about strata mismanagement and rising costs.

Strata Owners Alliance founder Adam Promnitz warns that owners are sometimes “ripped off by unscrupulous strata managers.”
Australian Apartment Advocacy has also flagged issues with soaring insurance premiums, hidden defects, and fees that jump significantly once buildings are occupied.

And then there are special levies – extra charges raised to cover major repairs or upgrades. In some cases, owners have been hit with bills of $50,000 to $100,000 or more, often with little warning.

How to Protect Yourself as an Apartment Buyer

If you’re considering buying an apartment, due diligence is essential. Here’s what to check:

Read strata meeting minutes from the past few years for any red flags.
Check the sinking fund balance (money set aside for future repairs).
Understand upcoming maintenance (e.g., lift replacements, structural issues).
Be realistic about ongoing strata costs and the risk of special levies.

💡 Tip: Always have your solicitor review strata records carefully before you sign.

Apartments: The Pros and Cons

Plusses

Affordability – Cheaper than houses and easier to get into the market.
Location – Often close to jobs, transport, and lifestyle amenities.
Lower maintenance – No lawns to mow; building maintenance is managed.
Amenities & security – Pools, gyms, concierge, and better building security.
Investment potential – High demand from tenants in urban areas.

Minuses

Less space & privacy – Shared walls and common areas can be a downside.
Restrictions – Renovations often require strata approval.
Strata fees – Ongoing costs that can eat into returns.
Special levies – Surprise costs for big repairs or upgrades.

Final Word

The old rule that “houses always beat apartments” is no longer true. With affordability pressures mounting and urban demand soaring, apartments are becoming an increasingly smart choice for both homeowners and investors.

But buyers must tread carefully. The key is due diligence: know the true costs, understand the strata, and weigh up the lifestyle and investment benefits against potential risks.

In 2025 and beyond, apartments may not just be the affordable option – they could also be the profitable one.