Apartment vs house investment
If you’re thinking about buying an investment property, what makes a better investment ‒ a house or an apartment? We break down some key considerations.

If you’re thinking about buying an investment property, what makes a better investment ‒ a house or an apartment? We break down some key considerations.
If you’re fortunate enough to be able to afford an investment property, you may be wondering what’s better – investing in a house vs an apartment? This will ultimately come down to your personal preference, as well as your current financial situation. Each property type has its own list of pros and cons that are worth considering, before you make a decision.
Investing in a house
Buying a house and the land it sits on are often an intriguing prospect for would-be investors for a variety of reasons, but they are not without their drawbacks.
Pros
1. Higher capital growth
Houses and their associated land generally offer better long-term price growth than apartments. This is due to land value increasing over time, especially in sought-after suburbs. Apartments usually have less land attached than houses do, hence less overall value. It’s important to note that this isn’t always the case, as a large block of land located in a remote part of Australia is unlikely to be more valuable than the floor space of an apartment in Double Bay (one of Australia’s richest suburbs). That’s why it’s important to consider location, as well as other market conditions when looking at investment houses.
Read More: Canstar’s Australian Property Market Report 2024
2. Opportunities to renovate and subdivide
Houses offer owners the luxury of being able to renovate and improve their property’s values without the need of approval from a body corporate (an entity that is made up of other owners in an apartment block). Subdivision may also be an option worth exploring (pending council approval), as it allows landowners to divide their property, often with the aim of building another property on the divided land.
3. Consistent rental returns
Houses may generally tend to attract families and professional couples, who have stable incomes and are often looking to stay in a certain suburb for a longer period of time due to schooling or work opportunities.
Pet owners may also choose to rent houses over apartments due to the extra yard space and flexibility in lease terms. Body corporate regulations may restrict or limit pet ownership in apartments/units (e.g. not allowing prospective tenants or owners to have pets, or setting weight limits on dogs). Pet owners generally seek longer tenancy lengths as well.
Cons
1. Price
A house is generally more expensive than an apartment/unit in the same area. The large initial outlay for a house can sometimes be a deterrent for investors.
2. Lower rental yield
Rental yield is the amount of money you make by renting out an investment property, compared to its purchase price, expressed as a percentage. It’s a metric that can help calculate your return on investment.
Generally, houses have lower rental yields than apartments and units, due to their larger purchase prices. The trade off for this often comes in the form of houses having better long term price growth. If you’re buying an investment property and focusing on rental income, houses may not be the best option.
3. Maintenance costs and upkeep
If your house is damaged or requires maintenance, you will have to foot the bill. You will be responsible for insurance premiums for the building itself, if you choose to take out a policy. The benefit of an apartment’s body corporate is that they often manage these things for you (e.g. a tree falls and hits the block of apartments, the body corporate would draw from their pool of funds and organise to remove the tree and fix the damage to the roof). To ensure that a home you’re interested in buying is structurally sound, it’s often worth booking a building inspection prior to purchase. That said, the maintenance and upkeep costs of a house can be claimed as tax deductions and can be components of negative gearing.
Related: The 12 red flags to look out for when inspecting a house
Investing in an apartment
Apartments and units are often more affordable than houses. However, there are other factors to consider before buying an apartment.
Pros
1. Affordable options
Apartments offer an affordable entry point into the property investment market, especially in sought after areas where house prices may be significantly higher. The lower initial outlay can also be more enticing.
2. Supply and demand
The Australian Bureau of Statistics (ABS) projects lone-person households will rise from 26% (2.6 million) to 26–28% (between 3.4 to 4 million) in Australia from 2021 to 2046. An increasing number of these single and two-person households who rent will typically look to apartments over houses, in order to keep rental costs down.
The ABS household income and wealth data also suggests that lone-person households and single parent families with dependent children are less likely to own their own property. If these smaller Australian households rent, there may be stronger demand for apartment rentals and, as a result, higher rental yields.
3. Maintenance costs and upkeep
Apartment and unit owners often share their cost of building insurance, maintenance and general upkeep with the other owners within the block in the form of a strata title. The body corporate (also referred to as an owners corporation) manages and maintains the common areas in these situations.
The money used comes from annual fees (body corporate fees) and other special fees (also known as special levies) paid by the apartment/unit owners. The cost of contents insurance; council rates; maintenance, repairs and improvements to private-use property; and utilities are the responsibility of the owners individually.
4. Potential for multiple assets
Since you’re unlikely to spend as much on an apartment as you would on a house, this would potentially leave you with extra money that could be invested in other ways, such as in the stock market or via ETFs. You may even be able to afford an additional apartment, which could provide you with more rental income.
Cons
1. Lower land value
Apartments typically have less associated land than houses, which means there’s less flexibility in what you do with it (e.g. exterior renovations or subdivision of the land). This is why apartments generally have lower long-term price growth than houses in similar areas.The long-term price growth for any property is influenced by many other factors, such as location, what similar properties sold for in the area, market trends, condition of the property itself, as well as other property characteristics.
2. Maintenance costs and upkeep
Maintenance costs are also a potential con for apartments, as the ongoing body corporate fees can add up over time and become expensive. These fees may potentially eat away at any rental return profits generated by an investment property. These fees are often higher for complexes that include facilities such as swimming pools, saunas, tennis courts and gyms.
3. Lack of control
Due to the strata title that most apartments and units fall under, you may be unable to renovate without the permission of the body corporate. This lack of control can limit the additional value that you can add to your apartments.
4. Future developments
In sought after areas, more apartments and units will often be built to supply the rental demands. In the event that the area becomes oversupplied, you could potentially suffer from lower rental yield, demand and price growth.
Related: What you need to know about property cycles
Are apartments a good investment?
Apartments and units can be worthwhile as investments as they offer an affordable entry point into the property market for new investors, especially in favourable areas where houses might be significantly more expensive. The lower initial outlay is also a smaller financial risk than the larger outlay expected for a house. While apartments tend to not increase in price at the same rates as houses, rental yields can often be higher.
Due to the demand for rentals in many major cities and the fact that apartments are usually smaller in size, it can be easier to find tenants for apartments than for larger, multi-room houses. There is also less management required for building maintenance in the form of strata title (if the apartment/unit is part of one). It’s important to keep in mind the additional costs associated with strata titles, like body corporate fees.
What is a rental yield?
Rental yield is the potential profit you can generate each year from your investment property expressed as a percentage of its value. To calculate a rental yield, the weekly rent is multiplied by 52 (the number of weeks in a year) and then divided by the purchase price.
Basing your choice on high rental yield alone isn’t always the best option, as there’s a range of factors that impact investment profitability. For example, some high-yielding rental properties can have no price growth, only a small amount of cash flow or a higher associated risk (depending on factors like location, prices of similar nearby properties, local infrastructure, economy, employment and vacancy rates).
For example, there are some incredibly high-yielding houses in many mining towns across Australia. Most of those properties, however, come with high risk, due to them being in an area that’s heavily reliant on business and employment. Inner-city apartments, on the other hand, tend to offer relatively high rental yields but have less associated risk, due to inner-city rental demand.
How did rental yields compare over the last 12 months?
Apartments and units typically have higher rental yields than houses. CoreLogic’s Quarterly Rental Review Report for the most recent quarter shows the gross national rental yield from units (including apartments) is 0.95% higher than that of houses. Data from the Australian capitals alone revealed an even wider gap of 1.15%.
There are, however, many factors aside from rental yield to consider to help you work out what kind of investment property best suits your needs.
Should I invest in a house or an apartment?
Ultimately, whether you should make an apartment vs house investment will depend on your investment strategy, the demand for and supply of certain property types at the time of purchase, the locations you’re looking at and what you can afford.
It’s important to do your research and consider speaking to as many people with relevant experience, such as real estate agents, accountants and seasoned property investors, before you make a purchase.
Ensuring your finances are in order can also be important. You could create a budget to see if you could make the repayments required (especially if you are still paying off your home loan) and check your credit score for free with Canstar, or via the Canstar App. You may be able to consider home loan pre-approval, which could give you a head start on preparing a loan for the investment property. If you need financial advice, it could be a good idea to speak with a qualified financial adviser before making a purchase or taking out a loan.
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This article was reviewed by our Content Editor Alasdair Duncan before it was updated, as part of our fact-checking process.

The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.