More people across Australia will opt for high density living in 2014, according to research by Colliers International.
The report found the proportion of unit building approvals rose from 25 per cent of all dwellings in mid-2009 to 43 per cent in late 2013.
"This is driven primarily by Sydney and Melbourne, where apartment approvals have exceeded those of houses,” Colliers managing director of residential Peter Chittenden said.
State government urbanisation policies and an increased desire for inner-city living are behind the trend, the report stated.
Into 2014, Sydney and Melbourne are predicted to experience robust price growth combined with flat rents, driving investors to cities like Brisbane.
More moderate price growth in the Brisbane market has kept rental yields above the national average.
The report also found price growth for all dwellings was set to continue into 2014, with a combined capital cities growth rate of 7.9 per cent.
However, the Sydney market is unlikely to perform to its previously high levels.
"Price growth was particularly strong in Sydney, Melbourne and Perth, with values in Sydney rising up to 11.6 per cent over the year," Mr Chittenden said.
"With such a significant increase, there is a question as to whether the Sydney market can sustain this level of growth in 2014,” he said.