How units shape the future of capital city property markets

With house prices soaring and supply tight, units present agents a high-demand, high-yield opportunity, making well-located apartments a smart, accessible investment choice. Australia’s unit market is emerging as a beacon for investors and first-home buyers, particularly in the bustling cities of Sydney, Melbourne, and Brisbane, where the escalating house prices have made traditional home ownership increasingly elusive.

The latest report from PRD, titled Smart Moves Capital Cities Edition: 2nd Half 2025, underscores the growing allure of the unit market. The report reveals that units remain 30 to 40 per cent cheaper than houses in certain areas, offering a more accessible entry point for both first-home buyers and investors. The report focuses on suburbs within a 20-kilometre radius of the CBD, spotlighting investment opportunities based on rental yield, affordability, development activity, and liveability.

A stark affordability gap between houses and units is evident in the data, with Sydney showing just 7.8 per cent of its suburbs offering affordable houses, compared to 36.9 per cent with affordable units. This trend is mirrored in Brisbane and Melbourne, where affordable houses account for only 22 to 25.4 per cent of suburbs, while 36 per cent of suburbs are affordable for units. Hobart stands as the sole exception nationwide, with affordable houses (34.7 per cent) outnumbering affordable units (28.2 per cent).

Dr Diaswati (Asti) Mardiasmo, PRD’s chief economist, elaborated on the shifting dynamics in the property market. “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,” she told REB. Her insights highlight the inevitability of units as a primary investment focus, given the current market conditions.

Dr Mardiasmo further explained the evolving market trends, noting, “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.” This shift suggests that units are not only becoming a more affordable option but are also offering competitive rental returns, making them an attractive proposition for investors.

The report identifies top investment opportunities across major cities, with Sydney’s Bankstown, Lakemba, and Parramatta leading the charge. These areas boast a median unit price between $500,000 and $600,000 and a rental yield of 5.6-6.1 per cent. In stark contrast, Sydney’s top suburbs for houses present a median price between $1,165,000 and $1,310,000 with a rental yield below 3 per cent.

Melbourne also presents promising prospects, with units in Bundoora, Broadmeadows, and Box Hill priced below $550,000 and offering a rental yield between 5.3 and 5.7 per cent. Dr Mardiasmo highlighted the narrowing price gap in Brisbane, where the median house price stands at $1.06 million, compared to the unit market’s median of $755,000. She stated, “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.”

Brisbane’s most affordable units are located in Logan Central, Zillmere, and Sherwood, with median prices ranging from $425,000 to $680,000 and rental yields between 3.3 and 5 per cent. However, Dr Mardiasmo noted a shift in Brisbane’s development pipeline towards premium, high-amenity projects, which is rapidly reducing the pool of genuinely affordable unit options.

Despite the differences in apartment markets across capital cities, Dr Mardiasmo emphasised the need for investors to reassess their strategies. “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,” she concluded.

As Australia’s property market continues to evolve, units are poised to play a pivotal role in shaping the future landscape, offering both challenges and opportunities for investors and homebuyers alike.

This article was first published on Real Estate Business, a sister publication of Property Buzz.