Apartment vs house: which investment type is the right choice for you?

It's widely assumed that houses always outperform apartments as investments. But according to Westpac, the reality is more nuanced.

Ask most people which makes a better investment, a house or an apartment, and the answer tends to come quickly.

Houses, they'll say. Because land appreciates, but bricks don't.

And while there's some truth to that, the reality is considerably more nuanced.

“The right property type really depends on your strategy, your budget, and the market you're buying into,” Westpac Home Loan Specialist, Nicole Hill, says.

And for first-time investors, dismissing apartments out of hand could mean missing some genuinely compelling opportunities.

"There are suburbs right now where units are outperforming houses on almost every metric that matters to investors,” says Nicole.  

The case for houses

The traditional argument for houses is straightforward: you're buying land, and land is finite. Therefore, as demand increases, the value of that land is likely to rise.

Over the long term, well-located houses in capital cities have historically delivered strong capital growth, and that growth tends to compound meaningfully over a decade or more.

According to the PropTrack Westpac Investor Report 2026, in cities like Brisbane, Adelaide and Perth, home prices have more than doubled since 2020, delivering extraordinary returns for investors who bought in those markets at the right time.

In Brisbane, for example, almost every property investor who sold in 2025 made a huge profit, usually around $445,000, after about nine years.

Houses also usually have tenants who stay longer, so you don’t have to find new renters as often.

Families in particular tend to stay put, which can reduce the headache of finding new tenants every twelve months.

The case for apartments.gNIfFx.gNIfFxcolor:var(--ck-textSecondary);margin-top:20px;/*!sc*/ data-styled.g211[id="style__SEODisclaimerText-sc-1j6h7ak-2"]content:"gNIfFx,"/*!sc*/ .hzOUpd.hzOUpdlist-style:none;display:block;-webkit-column-fill:auto;-webkit-column-fill:auto;column-fill:auto;-webkit-column-count:4;column-count:4;height:100px;display:block;overflow-x:hidden;/*!sc*/ .hzOUpd.hzOUpd lidisplay:list-item;/*!sc*/ .hzOUpd.hzOUpd afont-size:0.75rem;line-height:1rem;font-family:"Pangea","Helvetica Neue",Helvetica,Arial,sans-serif;font-variation-settings:"XTDR" 50,"APRT" 100,"SPAC" 40;font-weight:400;color:var(--ck-textSecondary);/*!sc*/ @media (max-width:1024px).hzOUpd.hzOUpd-webkit-column-count:3;column-count:3;height:150px;/*!sc*/ @media (max-width:767px).hzOUpd.hzOUpd-webkit-column-count:2;column-count:2;height:200px;/*!sc*/ .TswAe.TswAelist-style:none;display:block;-webkit-column-fill:auto;-webkit-column-fill:auto;column-fill:auto;-webkit-column-count:4;column-count:4;height:100px;display:none;overflow-x:hidden;/*!sc*/ .TswAe.TswAe lidisplay:list-item;/*!sc*/ .TswAe.TswAe afont-size:0.75rem;line-height:1rem;font-family:"Pangea","Helvetica Neue",Helvetica,Arial,sans-serif;font-variation-settings:"XTDR" 50,"APRT" 100,"SPAC" 40;font-weight:400;color:var(--ck-textSecondary);/*!sc*/ @media (max-width:1024px).TswAe.TswAe-webkit-column-count:3;column-count:3;height:150px;/*!sc*/ @media (max-width:767px).TswAe.TswAe-webkit-column-count:2;column-count:2;height:200px;/*!sc*/ data-styled.g212[id="style__TabContent-sc-1j6h7ak-3"]content:"hzOUpd,TswAe,"/*!sc*/

Here's where it gets interesting.

While houses may win on long-term capital growth in many markets, apartments often tell a more compelling story when it comes to rental yield, or in other words, how much money a property makes from rent compared to what it costs.

And for investors focused on cash flow, that matters enormously.

The PropTrack Westpac Investor Report 2026 shows that across Australia’s capital cities, units consistently deliver higher gross rental yields than houses.

In some suburbs, the gap is significant.

Data shows that across Australia’s capital cities, units consistently deliver higher gross rental yields than houses. Picture: Getty

Take Notting Hill in Melbourne’s south-east, where units recorded a gross rental yield of 8.1% last year. That’s a figure that would be the envy of most house investors anywhere in the country.

In Perth's inner suburbs, unit yields of 5% and above are relatively common.

Apartments also come with a lower entry price point, which is no small consideration for first-time investors.

Nearly half of all investor enquiries on realestate.com.au in 2025 were for properties under $700,000 and in most capital cities, that budget goes a lot further with a unit than a house.

"Yield matters when it comes to rental properties, especially early on," says Nicole.

"A property that generates strong rental income from day one can help you manage your cash flow while you wait for capital growth to do its work."

But… it depends on the market

One of the most important things to understand is that the house vs apartment debate plays out very differently depending on where you're buying.

In Sydney, for example, well-located units in the inner south-west have been leasing in under three weeks and delivering yields well above the city average.

In Melbourne, apartments in suburbs like Cremorne and Burwood East recorded both strong price growth and solid yields in 2025, making them attractive on both fronts simultaneously.

In places like Brisbane and Perth, where house prices have jumped, units are becoming a more affordable way to buy into popular areas.

"Location will always be the most important factor," says Nicole.

"A well-located apartment in a high-demand suburb will almost always outperform a poorly-located house.”

“The property type is secondary to where it sits and what the rental demand looks like."

Think about your strategy first

Ultimately, the house vs apartment question is really a question about what kind of investor you want to be.

Investing will look different for everyone, because no two strategies are the same. Picture: Getty

If your goal is long-term wealth building through capital growth and you have the budget to buy in a well-located suburb, a house may well be the right vehicle.

If you're focused on generating income from day one, managing your cash flow, or getting into the market at a lower price point, an apartment might serve your goals better.

Neither is inherently superior.

What matters is that the property you choose aligns with your financial position, your investment timeline, and the market you're entering.

That's exactly the kind of conversation worth having with a Westpac lending specialist  before you commit.

Things you should know:Westpac data: January to December 2025. Conditions, credit criteria, fees and charges apply. Residential lending is not available for Non-Australian Resident borrowers. This information is general in nature and has been prepared without taking your personal objectives, circumstances and needs into account. You should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice. Any tax information described is general in nature and it is not tax advice or a guide to tax laws. We recommend you seek independent, professional tax advice applicable to your personal circumstances.© Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.