Australia's property shift: Units now outperforming houses
Apartments are now outperforming houses in price growth across most of Australia's capital cities — but Melbourne buyers aren't convinced.
A major new report from Hotspotting and Nuestar has flipped Australia's long-held property logic, revealing unit prices are now rising faster than house prices in the majority of capital city markets, driven by affordability pressures, soaring rents and shifting buyer psychology.
The analysis shows 62.9 per cent of apartment markets in capital city council areas recorded equal or higher median price growth than houses in the year to May 2025.
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Brisbane led the charge, with 76.3 per cent of its apartment markets outperforming houses. Perth followed closely with 75 per cent, and Sydney wasn't far behind at 71.4 per cent.
Hotspotting founder Terry Ryder said the old rule that houses on land always delivered superior capital gains no longer held true.
'The once-dominant paradigm is simply no longer the case,' Mr Ryder said.
'The demand for apartments is being driven by affordability, lifestyle preferences and higher rental yields. And that's showing up in the numbers.'
Nuestar founder Michael Wilkins said buyers today were more value-conscious and lifestyle-focused than ever before, and quality apartment design was lifting performance.
'The quality of today's new apartments is worlds apart from the cookie-cutter blocks of 10 years ago,' Mr Wilkins said.
'Buyers want smart floorplans, integrated amenities and access to transport, and that's what's driving performance.'
Across Australia, 154,928 apartments were sold over the past 12 months, a number experts expect will continue to grow into 2025.
But in Melbourne, the apartment resurgence has failed to land.
MR Advocacy director and buyers agent Madeleine Roberts said local demand remained heavily skewed toward houses and villa units, with the inner-city apartment market still burdened by longstanding stigma.
'We're definitely not seeing that trend in Melbourne,' Ms Roberts said.
'Apartments here, particularly in Docklands and the CBD, have underperformed for years. They just don't offer the same growth potential.'
While lower prices appealed to some buyers, Ms Roberts said most were still opting to move further from the city in exchange for land.
'We've always been a city that values space,' she said.
'Apartments might be cheaper, but they're not seen as a stepping stone, more like a compromise.'
The MR Advocacy director said her firm hadn't bought a single inner-Melbourne apartment on behalf of a client in recent months, instead steering buyers towards villa units and townhouses in Melbourne's middle-ring and outer suburbs.
'There are still good-quality apartments out there, but not all stock is equal,' Ms Roberts said.
'You've got to be careful. Some of these buildings come with high body corporate fees, low growth, and difficult resale.'
Ms Roberts said rentvesting was emerging as a smarter strategy for younger buyers.
'Buy where the numbers work, rent where the lifestyle works,' she said.
'It's often cheaper to rent an apartment than to own one here, and you can still build equity elsewhere.'
In Brisbane, the apartment surge is already well underway.
McGrath Wynnum-Manly principal Gaby McEwan said the unit market had roared back to life, driven by downsizers, first-home buyers and investors.
'We've absorbed that oversupply of apartments we had back in 2014 to 2016,' Ms McEwan said.
'Now we're in a completely different market. There's real scarcity, and real demand.'
Ms McEwan said buyers who had been priced out of detached houses were now turning to low-maintenance apartments and two-bedroom townhouses in lifestyle-rich suburbs.
'Two cousins I know recently bought a townhouse on Charlotte St in Wynnum for $710,000,' she said.
'They're rentvesting and know the value's only going up. That's the kind of mindset we're seeing.'
The McGrath Wynnum-Manly director said luxury apartments were also in high demand from retirees, but a lack of downsizer-friendly stock and high entry prices were stalling many transitions.
'We've got retirees trying to simplify their lives and move into modern apartments,' Ms McEwan said.
'But some of these new builds start at $1.8m and go as high as $2.3m. In many cases, that's more than what their current house is worth.'
She added that without stronger downsizer incentives, many older Australians were staying in large, ageing homes longer than they wanted to — or should.
'I've seen people in their 70s, 80s and even 90s still living in high-maintenance properties, some won't move until they have a fall and it's too late,' Ms McEwan said.
'There's a real housing gap here, and it's hurting the most vulnerable.'
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