Australia’s apartment sector continues to gain momentum, with investors seeing increasingly strong returns. A new report titled The Rise and Rise of Apartments, released by Nuestar and Hotspotting, shows that rental growth in apartments is now exceeding that of houses across many regions of the country.
Nuestar founder Michael Wilkins said that more than half of apartment markets across Australia’s major capital cities have recorded higher rental growth than comparable house markets.
“More renters are opting for attached dwellings in key markets across the nation, which has driven up rents and returns for investors,” Wilkins said. “Apartments are not just an affordability play. In the right locations, they provide access to high-demand, high-quality markets at a lower entry point than houses.
“Our analysis of the Australian apartment market revealed that 166 apartment markets achieved double-digit median asking rent growth over the past 12 months.”
Strong Rental Growth Across States
Queensland led all states with 53 apartment markets achieving double-digit growth. It was followed by New South Wales with 37, Western Australia with 25, Victoria with 20, the Northern Territory with 16, South Australia with 10, and Tasmania with 5. The Australian Capital Territory recorded no apartment markets with double-digit growth, with its highest result reaching 7%.
Changing Dynamics in Apartment Living
Hotspotting founder Terry Ryder said apartment living across Australia is undergoing a major shift. “It’s a whole new paradigm, really,” Ryder said. “I often say the only constant in real estate is change, and this is a significant one. “Historically, houses on land delivered stronger growth and were seen as better investments, but that is changing.
“The demand for apartments comes from multiple factors — not just affordability, but also low-maintenance living, the lock-and-leave lifestyle, and premium locations compared to suburban houses.”
High-Rent Apartment Markets
Rising rental prices have pushed 18 apartment markets to median rents above $1,000 per week. All but one of these are located in New South Wales, with The Rocks in Sydney leading at $1,425 per week, followed by Caringbah South in the Sutherland Shire at $1,300 per week.
The only market outside New South Wales in this category is Pegs Creek in Karratha, Western Australia, at $1,150 per week. In Queensland, Noosa records the highest apartment rents at $959 per week. In Victoria, Mont Albert North in the Whitehorse local government area reaches $750 per week.
Capital City Rental Growth Performance
Greater Melbourne recorded the strongest performance among capital city regions, with 114 suburbs where apartment rent growth exceeded house rent growth over the past year.
It was followed by Greater Sydney with 104 suburbs, Greater Brisbane with 69, Greater Perth with 37, Greater Adelaide with 27, Greater Darwin with 12, the Australian Capital Territory with 14, and Greater Hobart with 3.
Investor Outlook and Policy Impact
Ryder said rising rents combined with relatively lower entry prices compared to houses are improving apartment investment returns.
He also highlighted that recent federal budget measures limiting negative gearing benefits to new builds are likely to boost demand for apartment investments.
“As a result of the budget changes, yields will become a higher priority for many investors, and as this report shows, higher yields are found in the apartment market,” Ryder said.
“There are many apartment projects underway, and their lower price point compared to standalone homes makes them attractive to investors seeking affordability. “New properties also offer stronger depreciation benefits, in addition to potential tax advantages through negative gearing.”
Rental Yields Across the Market
The research found that across Greater Capital City markets, 162 apartment markets offer rental yields of 5% or higher, compared with only 11 house markets. The highest apartment yields are concentrated in Greater Darwin suburbs, which occupy all top ten positions, starting at 7.9% in Karama.
Other notable yields include Carlton in Greater Melbourne at 6.8%, Curtin in the ACT at 6.5%, Perth at 6.1%, Auburn in Sydney at 6.3%, Brighton in Hobart at 5.5%, Adelaide at 5.3%, and Woolloongabba in Brisbane at 4.6%.
“All these fundamentals together show that the apartment market is gaining strength as a force in property investment and will continue to do so,” Wilkins said.
