Apartment vs house – which is better?

Units can have the edge for affordability and low maintenance, but when it comes to price growth, recent figures from CoreLogic show that owning a house has plenty of pluses too. We look at the numbers involved.

If you’ve ever flown across any of Australia’s major cities, one of the features that likely struck you was the sheer volume of house rooftops. 

It’s a very different picture in large cities across other parts of the world – from London to Dubai – where apartments tend to dominate the cityscape. Australia is catching up on apartment living.  

Data from the 2021 census shows around 1.7 million Australians now live in apartments, up from 1.4 million in the 2016 census[1]. 

 While the majority of Australians live in houses, there’s a lot to be said for apartment living. One of the biggest pluses is affordability. Nationally, the median apartment price is about $649,464, a saving of more than $210,000 compared to the median house value of $860,454[2].  

In Sydney, our most expensive city, that gap is far wider. The median house value of $1,466,475 is a whopping $611,007 higher than the $855,468 median apartment value.

Of course, apartments have other advantages too. They generally require far less maintenance than a house on land and are often located close to retail hubs and transport links. All these factors make apartments especially popular with first home buyers and investors.

But how do apartments compare when it comes to capital growth? Let’s take a look.

Mixed results around profit-making sales

CoreLogic’s latest Pain & Gain report[3] looked at home resales for the first three months of 2024. 

It found that across all 85,000 properties sold, 94.3% were sold for a profit – and a pretty handsome gain at that. The median gain on sale was $265,000.

However, if we dig a little deeper into the data, it turns out that 97.1% of house resales made a gain on sale compared to 89.0% of units.  

On the face of it, this would suggest that houses are more likely to deliver a capital gain than units. Not so. CoreLogic’s results vary widely between cities, and also between metropolitan versus regional markets. This highlights the value of understanding local property markets, with the assistance of an expert such as your local Raine & Horne agent.  

Houses come out on top for long term capital growth

When it comes to capital growth, it’s hard to go past houses over the past decade. In the 10 years to May 2024, house values in Australia rose 84.9%, compared to a 41.1% rise in unit values[4]. That said, CoreLogic points out that COVID played a role in these results. The need to maintain social distancing during the pandemic saw our preferences greatly skew to houses.  

As a result, since March 2020, the start of the pandemic, house values have risen 41.3% while unit values nationally have climbed 18.8%.

The verdict

There is no getting around the fact that houses have always maintained a premium because of the value of land, and the development opportunities the land offers. 

For investors though, apartments have the appeal of typically higher yields – around 4.5% across our capital cities, compared to 3.2% for houses[5]. 

And for many Australians, the affordability of apartments means a unit will be their first important step onto the property ladder. 

In a nutshell, the argument shouldn’t be about “which is better – houses or apartments?”. The real question is which type of property is right for you, your needs and your budget.  

For investors, downsizers, first home buyers, and anyone looking for a low maintenance home, an apartment can tick plenty of boxes.

[1] https://www.abs.gov.au/statistics/people/housing/housing-census/latest-release#:~:text=There%20were%2010%2C852%2C208%20private%20dwellings,16%20per%20cent%20were%20apartments.
[2] https://www.corelogic.com.au/__data/assets/pdf_file/0016/23191/CoreLogic-HVI-JUL-2024-FINAL.pdf
[3] https://www.corelogic.com.au/news-research/news/2024/profitability-reigns-as-property-gains-hit-14-year-high
[4] https://www.corelogic.com.au/news-research/news/2024/profitability-reigns-as-property-gains-hit-14-year-high[5] https://www.corelogic.com.au/__data/assets/pdf_file/0016/23191/CoreLogic-HVI-JUL-2024-FINAL.pdf