OPINION: The Apartment Myth — Why I’m Not Betting on High-Rises for Capital Growth in Australia

In the property space, trends come and go — but right now, one narrative is making a strong comeback: apartments are about to boom.

Some voices in the industry argue that due to rising interest rates, affordability pressures, and a growing population, apartments are the next big thing for capital growth. They point to global cities like New York, Singapore, or Hong Kong, where vertical living dominates and apartments are prized assets.

I get it. The logic seems sound on the surface — Australia is urbanising, land is scarce, and younger generations are adapting to smaller spaces. But before we start rewriting the playbook on high-density investing, we need to pause.

Because as someone who works with real data and real investors every day, I believe much of the hype around apartment investing in Australia is premature — and in some cases, misleading.

Why the International Comparison Doesn’t Stack Up

Yes, apartments in cities like Singapore and New York command extraordinary prices. But trying to overlay that logic onto Australia is flawed for a few key reasons:

Our Cities Are Still Low-Density by Design

Australia is not landlocked. We have urban sprawl, car culture, and planning systems that still prioritise detached homes and low-rise suburbs. Even our densification efforts — like Melbourne’s Suburban Rail Loop or Sydney’s metro expansion — are designed to support both apartments and house-and-land developments further out.

Cultural Preference for Detached Living

Australians still overwhelmingly prefer a house on land. Even with affordability pressures, most buyers will stretch their budget or relocate to outer suburbs before they choose a unit. Until that cultural shift truly changes — and that’s a decades-long journey — apartments will remain a secondary choice for many.

Foreign Examples Don’t Reflect Our Policy Landscape

In Singapore, the government owns and controls most of the housing supply. In New York, zoning laws and heritage protections severely restrict new supply. In Hong Kong, land release is tightly managed and vertical living is the only option for most residents.
Australia’s market structure is entirely different. Comparing our apartment market to these cities is like comparing a ute to a bullet train.

Apartments and Capital Growth: The Historical Data

Let’s set the emotion aside and look at what the numbers tell us.

Over the past 20 years, detached houses have consistently outperformed apartments in capital growth across nearly every major Australian market. Why? One word: land.

Land is what appreciates. The building itself depreciates. In a high-rise apartment, you own very little land. That’s why, even in high-demand areas, apartments often lag behind houses in growth.

For example:

• A house in Western Sydney purchased in 2013 has likely doubled in value by 2023.
• An apartment in Parramatta from the same era may have grown by just 20–30% — or not at all.

When we analyse long-term property performance, the top quartile of growth suburbs is rarely dominated by unit-heavy postcodes. It’s the land-rich, supply-constrained, family-oriented markets that lead the pack.

The Hidden Costs That Erode Apartment ROI

Even if an apartment seems affordable or well-located, investors need to consider the real costs of ownership. These include:

1. Strata Levies

Ongoing body corporate fees can range from $3,000 to $10,000+ per year. Buildings with lifts, pools, gyms, or concierge services are particularly expensive. Over 10 years, that can chew through tens of thousands of dollars in cash flow.

2. Special Levies

These are the big surprises — structural defects, cladding issues, fire safety upgrades — that get passed onto owners when the sinking fund falls short. A $20,000 special levy is not uncommon.

3. Limited Renovation Potential

With houses, you can add value through extensions, granny flats, or cosmetic upgrades. Apartments? You're mostly limited to internal changes. No land, no expansion, no development upside.

4. Resale Competition

Selling an apartment often means competing with dozens — sometimes hundreds — of identical or near-identical properties in the same block. This dilutes scarcity and slows capital growth.

5. Less Demand from Owner-Occupiers

Apartments are often investor-heavy. That might be fine during boom times, but when the market softens, investor-grade stock is often the first to drop in value.

The Oversupply Problem

While Australia may have a housing shortage in broad terms, the issue is not uniform across all property types or locations.

Some inner-city markets — particularly Melbourne’s CBD and Brisbane’s high-rise corridors — have struggled with oversupply for years. Thousands of off-the-plan apartments built between 2016 and 2020 still haven't seen meaningful capital growth. Many are under-rented, poorly maintained, or sold at a loss by investors burned by overpromising and under-delivering developers.

Even in 2025, the risk of oversupply remains a real threat in areas where high-rise approvals continue to outpace population growth.

When Apartments Might Make Sense

I’m not saying all apartments are bad investments. There are always exceptions:

• Boutique blocks in tightly-held suburbs (e.g. Bondi, South Yarra, Cottesloe)
• Older-style apartments with larger floorplans and minimal strata fees
• Small complexes with unique features, views, or redevelopment potential
• Units purchased at significant discounts or distressed sale price
• SMSF buyers prioritising stability over aggressive growth

But these scenarios require careful due diligence. Most of the time, investors are being sold cookie-cutter units in oversupplied areas with glossy brochures and unrealistic promises.

Final Thoughts

Here’s my view: apartments can have a role in a portfolio — but they’re not the path to fast-track capital growth in Australia. Not today. Not in this market.

For most long-term investors seeking growth, a house on land in the right suburb will beat an apartment every time.

And unless we see massive shifts in zoning, planning, population density, and lifestyle preferences, Australia will remain a market where land is king — and vertical living will always play second fiddle to the great Aussie backyard dream.

So don’t buy the sales pitch. Buy the data. Buy the logic. Buy the kind of asset that gives you leverage, flexibility, and growth — not just convenience.