With Melbourne’s median house price pushing beyond the reach of many first home buyers and investors, the question on everyone’s lips is: Are apartments a good investment in Melbourne?
It’s a valid consideration, especially in 2025, where affordability constraints, lifestyle preferences, and proximity to the CBD are steering buyers towards units. But as with any property decision, there are pros and cons worth weighing up.
What the History Tells Us
Historically, apartments, even in Melbourne’s most desirable, blue-chip suburbs, haven’t delivered the capital growth that freestanding homes have. On average, many have seen growth hover around just 2% annually. This subdued performance largely comes down to one factor: land.
Apartments don’t include land ownership in the same way that houses do, and in property, land tends to drive capital growth.
So Why the Shift Toward Apartments?
Despite this, there’s a noticeable increase in apartment interest. More first home buyers are choosing apartments, not necessarily because they prefer them, but because they offer a way to stay close to the city without stretching borrowing limits. Many of these buyers are single professionals whose budgets don’t stretch to freestanding homes, particularly in Melbourne’s inner suburbs.
As noted by Domain, Anthony Webb from Belle Property explains:
What Makes an Apartment Investment Smarter in 2025?
While apartments may not typically outperform houses, not all apartments are equal. The ones showing stronger growth tend to have:
- Outdoor space, such as balconies or courtyards
- Smaller complexes, where fewer units share the land
- Character and scarcity, rather than being part of a sea of identical, high-rise options
Location remains key. Choosing areas where apartment supply is limited and demand is stable can mitigate some of the historic downsides.
Risks to Be Aware Of
Whether you’re buying to live in or rent out, due diligence is critical. There are a few red flags to keep front of mind:
- Cladding issues continue to affect many apartment buildings across Victoria. Remediation costs can reach tens of thousands of dollars per unit.
- Sinking funds: Always review the financial health of the Owners Corporation. Is there enough money set aside for future maintenance? If major works are planned, can the fund cover it?
- High strata fees can be a sign that the building is struggling or poorly managed.
We also recommend asking the agent two key questions:
- Are more apartments being built nearby? New developments can obstruct views, add competition, and dilute demand.
- Can I see all the common areas? Don’t stop at the front door. Inspect the carpark, gardens, foyers, and rooftop spaces. They tell a bigger story.
Avoiding the New Build Trap
Buying off-the-plan or brand-new? Be cautious. These properties may look appealing, but you can’t predict what defects will emerge once people move in. The developer’s track record is everything. If they’ve delivered quality in the past, you’re in safer hands. If not, it could cost you.
To protect your purchase, we strongly recommend a full building inspection before signing. One of the teams we trust is Site Inspections, who offer detailed, reliable reports tailored for apartment buyers.
Need Some Guidance?
Apartment investment in Melbourne might not come with the same capital growth promise as houses, but in the right locations, and with thorough due diligence, it can still be a worthwhile step onto the property ladder, especially for buyers who value location, lifestyle, and lower entry prices.
At Parker Buyer Advocates, we help clients make confident, informed decisions by assessing not just the apartment, but the bigger picture.
Book a call today so we can help you in your investment decision.
Recent Comments