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No longer a backup strategy: Why investors can't ignore units anymore
Investors will need to move past their reluctance toward units, as soaring house prices, rising yields, and surging demand make quality apartments standout opportunities, an expert said.
Australia’s unit market has become a key opportunity for investors and first-home buyers, as soaring house prices limit accessible options, particularly in Sydney, Melbourne, and Brisbane.
In their latest report, Smart Moves Capital Cities Edition: 2nd Half 2025, PRD found that the unit market remained 30 to 40 per cent cheaper than houses in some areas, making it the more accessible entry point for both first-home buyers and investors.
The report identified suburbs within a 20 km radius of the CBD and highlighted investment opportunities using indicators of rental yield, affordability, development activity, and liveability.
Data showed an affordability gap between houses and units, with Sydney recording only 7.8 per cent of suburbs with affordable houses, compared with 36.9 per cent with affordable units.
Brisbane and Melbourne showed a similar trend, recording between 22 and 25.4 per cent of suburbs with affordable houses, while 36 per cent of suburbs were affordable for units.
Hobart was the only exception nationwide, where affordable houses (34.7 per cent) outnumbered affordable units (28.2 per cent).
PRD chief economist Asti Mardiasmo told SPI that investors will have to rethink their aversion to units, as rising rental yields and overall market accessibility made units a logical and profitable investment.
“I get it that there's strata, there's body corporate, and that does put people off a lot, but we have to be realistic, in terms of stock that is coming onto the market, there is nothing else that is being built other than units in capital cities,” Mardiasmo told SPI.
She said that with slow construction, strong demand, and steady cash rates, units provide medium-term growth opportunities for investors seeking an affordable entry point.
“While normally houses have a high rental yield compared to units, the market is shifting.”
“We're seeing a pickup in unit rental yields now, because it has become too expensive for people and families to rent houses.”
Across the country, the data showed that for the first time, Brisbane, Melbourne, and Sydney had the same percentage of suburbs with affordable units, at around 36 per cent.
The report found that the top three investment opportunities in Sydney were Bankstown, Lakemba, and Parramatta, with a median unit price between $500,000 and $600,000 and a rental yield of 5.6-6.1 per cent.
In comparison, the top three suburbs for houses in Sydney had a median house price between $1,165,000 and $1,310,000 for a rental yield below 3 per cent.
Similarly, the report showed that units in Bundoora, Broadmeadows, and Box Hill in Melbourne were prime for investment, with a median price below $550,000 and a rental yield between 5,3 and 5,7 per cent.
Mardiasmo said that while Sydney and Melbourne still had plenty of affordable unit markets, Brisbane was starting to dwindle, with the price gap between apartments and houses narrowing.
Data showed that Brisbane median house prices were $1,06 million while the unit market sat at a median of $755,000.
The report found that Brisbane's most affordable units were in Logan Central, Zillmere, and Sherwood, with a median price between $425,000 and $680,000, with a rental yield between 3.3 and 5 per cent.
“Sydney and Melbourne are getting tens of thousands of units, we're only half of what Brisbane.”
“Even if we are still finding affordable units in Brisbane now, as time goes by and as the cash rate is looking to remain steady, the market will reshuffle.”
Mardiasmo said that Brisbane’s pipeline has been shifting toward premium, high-amenity projects rather than affordable stock, with the pool of genuinely affordable unit options shrinking rapidly.
While capital cities' apartment markets differ, Mardiasmo said that investors across the country need to work out the dollar value and reconsider purchasing units as many renters where now willing to pay a slight premium for well-finished assets.
“At the end of the day, if you really want to get into the market, if you really want to invest, unit is something that you need to consider. You cannot just go, no, not going to go to units.”
“If we're talking about opening up your portfolio, opening up your investment possibilities, the fact that there's just not enough houses, you are going to be battling with owner occupiers, and other investors. You will have to consider units,” she concluded.
