Are Apartments a Good Investment? What Every Property Investor Should Know

Article Highlights

• Perth apartments outperformed houses for median sale price growth in 2024-25, with unit prices up 20% over the financial year versus 16.4% for houses, and yields of 5.1%-5.7%, making them one of the strongest-performing asset classes in Australia right now.
• National apartment vacancy rates sit at just 1.2%, the tightest in two decades, creating sustained rental demand and income security for investors who choose the right property type.
• Not all apartments are equal; boutique low-rise complexes in owner-occupier suburbs with strong land-to-asset ratios consistently outperform CBD high-rise towers built purely for investors.

If you’ve been watching the property market lately, you’ve probably noticed something interesting.

Apartments are back on investors’ radar, and for good reason.

After years of being overlooked in favour of houses, units are quietly delivering some of the strongest returns in the country. But before you jump in, it’s worth understanding what’s changed, where the opportunities are, and how to avoid the mistakes that have cost other investors dearly.

So, are apartments a good investment in 2026? The short answer is yes, but only if you buy the right type in the right location.

Why Apartments Are Back in Focus in 2026

Over the past 25 years, the number of occupied apartments in Australia has increased by 78%, especially in urban areas of major capital cities, according to the Australian Bureau of Statistics. That’s not a trend, it’s a structural shift in how Australians live.

More people are living in apartments than ever before, reflecting changing preferences for urban proximity, affordability, and community benefits.

In 2001, just 8.8% of the population lived in apartments – about 1.6 million people. By 2021, that figure had climbed to 10.4%, or 2.4 million people, and it’s still rising. Lone-person households are projected to reach between 2.8 million and 3.7 million by 2026, and many of those people actively prefer apartment living for its convenience, location and lifestyle.

Two-person households are also a key demographic, often choosing apartments for their affordability and central locations, which helps drive steady rental demand and higher yields for investors.

The Australian Bureau of Statistics projects that the number of lone-person households will rise significantly, increasing demand for apartment rentals as these households often prefer apartment living. Over the next decade, demand for apartments is expected to continue growing as demographic trends point to more Australians choosing apartment living.

At the same time, Australia’s housing shortage has intensified. National vacancy rates have dropped to 1.0% as of January 2026, the tightest level in two decades. For apartments specifically, vacancy sits at 1.2%, meaning tenants are competing for stock, not the other way around.

Add to that a thin construction pipeline (WA apartment approvals fell 29.8% in December 2025) and rising build costs that make new high-rise developments financially unviable, and you’ve got a perfect storm for rental growth and capital appreciation.

This isn’t speculation. It’s supply and demand playing out in real time.

Apartment vs House: The Key Metrics

Let’s compare the numbers, because that’s where the case for investing in a property like an apartment really becomes clear.

Nationally, unit prices increased by 8.7% over the past year, with some regions showing even higher growth; Brisbane, for example, saw prices surge by 19%. While houses climbed 11% nationally, rising house prices have made apartments a more attractive option for many investors. On the surface, houses win. But dig deeper and the picture changes.

Gross rental yields for apartments average 5.1%–5.7% across capital cities, compared to around 3.7%–4.3% for houses. What that means in practice is that apartments often provide better rental yields, which means better cash flow, lower holding costs, and a property that pays for itself faster. Rental yield is calculated by dividing the annual rental income by the purchase price, making the initial cost a key factor in determining returns.

Apartments also trade at around 34% below the median house price in capital cities, giving first-time investors a much lower barrier to entry. You can own an investment-grade asset in a strong suburb without needing a seven-figure budget.

Apartments offering a more affordable entry point allows new investors to access the market with less capital and reduced financial risk. This accessibility also enables investors to acquire multiple assets, helping diversify their portfolios and spread risk.

When comparing property types, apartments typically have lower land value and less associated land than houses. Lower land value apartments may see less long-term capital growth compared to houses, but in high-demand, land-scarce areas, apartments can still offer competitive returns.

The choice between apartments and houses should align with your overall investment strategy, considering how different property types fit into your broader investment plan.

Then there’s the affordability factor. In WA, the median apartment price is $650,000 compared to $908,000 for a house. In Queensland, it’s a similar story. That discount matters when you’re trying to get your foot in the door or build a diversified portfolio.

Understanding current market trends is crucial, as property values and yields can fluctuate based on location, property type, and broader economic patterns. Working with experienced advisors can help you navigate these shifts and make more informed investment decisions.

Perth & Brisbane Unit Markets: Local Opportunities

If you’re serious about apartment investing, Perth and Brisbane are where the action is right now, especially as major cities and urban centres continue to attract strong demand for apartment living due to their proximity to city amenities and vibrant lifestyles.

Perth apartments posted 26.1% annual value growth to April 2026, reaching a median of $746,779, the strongest of any capital city. Last quarter alone saw an 8.9% lift. Units are now outgrowing houses in Perth on a percentage basis (26.1% vs. 24.1% annually) as buyers pivot toward more affordable “attached dwelling” segments.

Gross rental yields sit well above the yield you’d get from a house, and the vacancy rate for units in Perth is extremely tight at approximately 0.6% to 2.1%, creating intense competition among renters.

That’s not just tight, it’s severe undersupply.

With WA apartment approvals down nearly 30%, that shortage isn’t going away anytime soon. Perth house prices have risen, leading buyer demand to shift toward the unit sector, which is supporting ongoing price growth. Properties near new METRONET rail expansions are seeing accelerated value uplift, as future developments and infrastructure projects like METRONET enhance property desirability and long-term investment returns.

However, the Perth market can be sensitive to mining sector cycles, which may impact demand and values over time. In high-density areas like the CBD and East Perth, a number of units are scheduled for completion, which could temporarily soften yields if demand fluctuates.

Suburbs like Maylands, Joondanna, East Victoria Park and Scarborough are delivering yields of 5% to 5.5% with vacancy rates below 1%. These aren’t CBD towers; they’re low-rise, owner-occupier-friendly complexes within seven kilometres of the city.

Over in Brisbane, unit prices climbed 21.5% year-on-year, with 6.1% growth in the last quarter alone. Yields range from 3.9% to 4.2% depending on the suburb, and vacancy sits around 0.9% to 1.2%. Interstate migration and 2032 Olympics infrastructure are absorbing inner-city stock faster than it can be replaced, further boosting demand in these urban centres.

New apartment approvals jumped 101% in February 2026 after a multi-year slump, but those completions won’t land until 2028 or later. In the meantime, demand is only growing.

If you’re working with a buyer’s agent in Perth or Brisbane, these are the markets where you want to focus your search.

Five Factors That Make an Apartment ‘Investment Grade’

Not all apartments are created equal. The difference between a property that grows in value and one that stagnates often comes down to five key factors.

1. Location and land value

Land appreciates; buildings don’t. That’s why boutique low-rise complexes in established suburbs consistently outperform high-rise towers. Look for apartments with a land-to-asset ratio above 40%. In a small block of eight to 10 units, each apartment carries a meaningful slice of the underlying land value.

When selecting a suburb, focus on areas with high owner-occupier rates rather than solely investor-owned complexes, as this often leads to better building maintenance and management.

2. Boutique size and scarcity

Avoid buildings with hundreds of units. The more apartments in a complex, the lower your individual land component and the harder it is to stand out in a crowded rental market. Smaller is better.

3. High owner-occupier ratio

Buildings with a strong mix of owner-occupiers tend to be better maintained, have lower turnover, and attract higher-quality tenants. If the whole block is investor-owned, that’s a red flag. The owners’ corporation, which manages common areas and shared costs, is typically more effective in buildings with a higher proportion of owner-occupiers.

4. Low strata fees

Strata fees in CBD high-rise buildings can run $6,000 to $10,000 per year. Boutique low-rise complexes typically sit between $2,000 and $4,000. That difference goes straight to your bottom line. Many WA investors consider strata fees above $8,000 a deal-breaker. Body corporate fees, which are typically collected quarterly, cover building insurance, maintenance, and common area upkeep, including amenities like swimming pools, which can increase these fees.

Apartments generally have lower maintenance costs and upkeep costs compared to houses, as these expenses are shared among all owners through body corporate fees, making them more predictable and easier to budget for.

5. Proximity to infrastructure and amenities

Apartments near public transport, schools, parks and employment hubs appreciate faster and rent more easily. Location isn’t just about lifestyle, it’s about long-term value. Shared amenities such as swimming pools can add value but also contribute to higher ongoing costs.

When you combine these five factors, you’re not just buying an apartment. You’re buying an investment-grade asset with genuine growth potential.

Risks to Watch (and How a Buyer’s Agent Mitigates Them)

Apartment investing isn’t without risk. The key is knowing what to watch for and how to avoid the common traps.

Strata costs and special levies can erode your yield if the sinking fund is poorly managed or the building has deferred maintenance. A good buyer’s agent will stress-test the strata records before you make an offer.

Capital growth disparity is real. High-rise investor stock in oversupplied precincts often underperforms, while boutique apartments in owner-occupier suburbs can post 6% to 8% annual growth. Asset selection matters more than market timing.

Limited value-add potential is another consideration. You can’t extend an apartment or subdivide the land. That’s why choosing a building with scarcity, renovation potential, or a strong land component is so important from day one. Houses can typically offer more opportunities for renovations and property development, which can add significant value over time.

Appealing features and access to a broader buyer market can also make a property easier to sell and achieve a higher selling price. This is where understanding how buyer’s agents can help becomes invaluable. We assess every property against these criteria, review strata financials, and ensure you’re not overpaying for a property that looks good on paper but won’t perform in practice.

Ready to Make Your Next Move?

Apartments aren’t the compromise they used to be. In the right location, with the right structure and the right strategy, they’re one of the smartest ways to build wealth through property in 2026.

But getting it right means doing your homework, understanding the data, and working with someone who knows the difference between a good apartment and a great one.

At You&Me Personalised Property Services, we specialise in finding investment-grade properties that tick every box. We assess land value, strata records, owner-occupier ratios, and long-term growth potential so you don’t have to guess.

If you’re ready to explore your options, book a discovery call with our team. We’ll walk you through what’s possible, what to avoid, and how to secure the right property at the right price.

FAQs About Apartment Investing

Do apartments appreciate in value in Australia?

Yes, but it depends on the type and location. Boutique low-rise apartments in owner-occupier suburbs with strong land components have consistently appreciated over time. High-rise CBD towers built purely for investors often struggle with oversupply and limited land value.

What is a good rental yield for an apartment?

A gross rental yield of 4.5% or higher is considered strong for apartments in capital cities. In Perth, yields of 5% to 5.5% are achievable in well-located inner-ring suburbs.

Can I renovate an apartment I own in a strata building?

Minor cosmetic updates like painting and new fixtures are usually fine, but major renovations require approval from the strata committee. Always check the bylaws before purchasing if you’re planning significant changes.

Are apartments better than houses for first-time investors?

For many first-time investors, apartments offer a lower entry price, better cash flow, and easier maintenance. However, the benefits of property investment depend on your goals, budget, and strategy. A well-chosen apartment in a strong location can outperform a poorly chosen house.

What’s the difference between body corporate fees and strata fees?

They’re the same thing, just different terms used in different states. Both cover building insurance, maintenance of common areas, and sinking fund contributions. Budget for these ongoing costs when calculating your investment return.