The Short Answer
Apartments can be good investments, but it depends on several factors: location, building quality, strata costs, supply levels and your investment goals. Not all units are created equal — some significantly outperform houses while others underperform.
The key is understanding what makes an apartment a good investment versus a poor one, and matching your choice to your financial situation and objectives.
Advantages of Apartment Investments
Apartments offer several potential benefits for investors:
- Lower entry price: More accessible for first-time investors with smaller deposits
- Higher rental yields: Often 4-5%+ compared to 2-3% for houses in the same area
- Less maintenance responsibility: Strata handles external repairs and common areas
- Prime locations: Access to areas where houses are unaffordable
- Strong tenant demand: Especially near transport, employment and amenities
- Depreciation benefits: Newer buildings offer higher depreciation claims
Disadvantages and Risks to Consider
Apartment investments also have potential drawbacks:
- Strata levies: Can be $1,000-$5,000+ per quarter, reducing net yield
- Limited land component: May affect long-term capital growth potential
- Oversupply risk: Some areas have excessive new unit development
- Building defects: Common in newer buildings, leading to special levies
- Body corporate restrictions: Rules on pets, renovations, short-term rentals
- Less control: Major decisions require owner votes
What Makes an Apartment a Good Investment?
When assessing apartment investments, buyers agents typically look for:
| Factor | What to Look For |
|---|---|
| Building size | Smaller boutique buildings (under 50 units) often perform better |
| Owner-occupier ratio | Higher owner-occupier ratio indicates better quality and demand |
| Building age | Older established buildings (10-30 years) often have proven track records |
| Strata health | Strong sinking fund, no major defects, reasonable levies |
| Scarcity factor | Limited new supply in the area supports values |
| Location fundamentals | Walking distance to transport, employment, amenities |
Apartments vs Houses: Investment Comparison
How apartments compare to houses as investments:
| Factor | Apartments | Houses |
|---|---|---|
| Entry price | Lower | Higher |
| Rental yield | Generally higher (4-5%+) | Generally lower (2-3%) |
| Capital growth | Variable; depends on building and location | Historically stronger on average |
| Ongoing costs | Strata levies can be high | Maintenance responsibility on owner |
| Control | Limited by strata rules | Full control over property |
Warning Signs: Apartments to Avoid
Red flags when considering apartment investments:
- Large high-rise developments with 100+ units (oversupply risk)
- Off-the-plan purchases in areas with heavy development
- Buildings with known defects or ongoing litigation
- Very high strata levies relative to similar buildings
- Low owner-occupier ratio (mostly investor-owned)
- Poor natural light, no parking, or unusual floor plans
- Areas with high vacancy rates or rental oversupply
Frequently Asked Questions
Do apartments grow in value?
Some apartments grow significantly in value while others stagnate. Growth depends on location, building quality, supply levels and market conditions. Well-located apartments in supply-constrained areas can achieve strong capital growth.
Are apartments better for rental yield?
Generally yes. Apartments typically offer higher rental yields than houses because of lower purchase prices relative to rent. However, strata levies reduce net yield.
Should first home buyers consider apartments?
Apartments can be a good entry point for first home buyers due to lower prices. Consider whether you plan to live there long-term or convert to investment. See First Home Buyer Guide.
Can a buyers agent help choose the right apartment?
Yes. A buyers agent can assess building quality, review strata reports, compare options and negotiate. See Buyers Agent for Investment Property.
Related Pages
Considering an Apartment Investment?
Our buyers agents can help you assess apartment investments, review strata reports and find units with strong fundamentals. We focus on quality over price and help you avoid common pitfalls. Seek independent financial and legal advice before purchasing.
Book a Free ConsultationGeneral Information Only: This page provides general information only. It is not financial, legal, tax or investment advice.
Individual Results Vary: Property performance depends on many factors. Past performance is not indicative of future results.
Seek Professional Advice: Consult a financial adviser, tax adviser and solicitor before purchasing property.