In my investment report back in March, 2015, I wrote:

“As can be seen from the data and research, Brisbane offers an excellent investment opportunity to take advantage of the forthcoming upturn and enjoy a great long-term investment. Brisbane apartments are currently well below trend, which may present an excellent long-term opportunity.”

At the time, Brisbane felt flat and uninspiring. It was still recovering from the GFC and the Brisbane floods.

Prices had barely moved for years. Even with strong data pointing to an upturn, it took until 2019–2020 before momentum really arrived. Back then, rental yields of around 6-7% were common on the secondary market. 

In hindsight, no one could have predicted just how powerful that upswing would be.

Perth: Written Off… Then Exploded

In the early 2000's Perth had been the quiet achiever with 120% house price growth over the previous decade.

It was not until 2002 that I decided to look into the Perth market myself. 

And t that time we did not have the research tools we have available today, so I made numerous personal visits to try to understand the Perth market, as there were very different drivers than that seen in Sydney or Melbourne.

In early 2003 I was featured in a newspaper article telling people to "run, not walk" into the Perth property market.

Clients saw the article, and told me I was wrong, Perth prices would not climb any further they said.

But even brand new apartments could still  be purchased for around $300,000 and generated a 6-7% gross rental return. 

Then prices soared until the end of the mining boom around 2008 with 130% growth.

When you consider gearing the returns on capital are enormous with that kind of property growth. 

Then Perth property prices went sideways for over a decade. From roughly 2008 to 2021, values barely moved.

By 2021, you could buy a house in Perth for around $400,000 and rent it for roughly $550 per week — a yield of 7%.

(TIP: For me, in my 30 plus years, whenever I have seen gross rental rental yields in a capital city hit 7%, its almost a guarantee of an forthcoming price upturn)

Fast forward to today and that same house may be worth closer to $700 - $800,000, with yields compressing into the 3–4% range.

Once again, like Brisbane, the biggest gains came after most investors had given up on the market.

Today everyone is looking for the next "hotspot" - the next place to soar - and brand new "advisors" are pushing their clients into regional towns and far flung areas based on what happened during Covid, when there WAS an exodus from the Australian capital cities to the regional towns.

Why Apartments in Sydney and Melbourne Are Misunderstood

"Apartments don't go up in value." "Only buy houses." "Never buy high rise."  These are common phrases you hear these days from many new advisors, and the public on property forums, and around the BBQ's in Sydney and Melbourne. I have been hearing that for 30 years.

To be clear, houses DO outperform most apartments in capital growth terms over the long term. Rental returns are lower, but capital growth is higher.

Of course in a city like Sydney, an apartment with a harbour view, even distant, can command top prices, and has shown excellent growth. 

CASE STUDY

An example is the 2 bedroom, one bathroom apartment I purchased on the 8th floor in an old building in Rangers Road, Cremorne/Neutral Bay with a harbour view in 1988 for $275,000 in my early years of property investing.

(I still remember to this day my mother saying to me "You paid HOW much for that small apartment?" Today it is valued at $1.6M)

Would I have been better to have purchased a house in a far flung suburb at that time. The answer is a resounding NO. 

My harbour view:

So clearly it is not correct to make broad statements like "apartments never go" up or similar.

See the chart below for the ACTUAL figures for each city.

BUT, Sydney houses are expensive. Median house prices now exceed $2 million.

Apartments, however, remain far more affordable — often under $1 million.

The price gap between houses and apartments in Sydney has never been wider. Again see the chart below.

And it a fact that over the past decade, Sydney units have significantly underperformed houses, growing at roughly half the annual rate.

Hence why you hear the comments "always buy houses never units."

But this gap won’t stay extreme forever. 

Sydney is Australia’s most popular destination for new migrants, slightly surpassing Melbourne. But not everyone can afford a $2–3 million house. In fact, it is probably fairer to say most cannot afford a $2-3 million houses.

But many can afford a $600,000–$900,00K apartment in a great location. This is already reflected in the fact that apartment sales outnumber house sales in Sydney.

Sydney is the only city this happens, clearly because of price.

Over time, affordability pressure forces demand toward apartments. Whether or not they would "choose" an apartment.

That is how apartment cycles begin.

For pure investment, excluding lifestyle or amenities or views, in Sydney you could consider:

• Older low-rise brick buildings

• Small number of units

• High land content

• Premium inner and middle-ring locations

• Areas not zoned for high-rise redevelopment

But whether in Sydney or Melbourne, these properties have both scarcity and land value — two things that matter in the long run. They were built in the 1960's when control was a lot tighter around residential developments.

The was no cutting corners and most of the materials were sourced from Australia. That these unit blocks are still here after 50 years is a testament to their quality.

Body Corporate fees for red-brick units are also usually much lower than those for modern apartments and often have  a sinking fund that has been established,  so there is 40 years of funds amassed that can be drawn on.

I love Sydney.

I started my real estate career in Sydney.

I consider myself very knowledgeable about the Sydney market, particulary in inner areas.

But, if I could only buy ONE property and my budget was limited, in 2026 I would seriously look to Melbourne if it was an investment (buying for own use is obviously different).

Here's why.

Melbourne: Quietly Setting Up for the Next Cycle?

Melbourne has underperformed for years after being one of Australia’s strongest markets for decades.

Let's compare over the past 7 years (basically since Covid) to March 2026 (SQM Research):

Per Annum increase: 

Melbourne Houses 5.1%   Apartments 3.1%

Sydney Houses        8.5%  Apartments 6.7%

Perth Houses           9.5%  Apartments 10.5%

Adelaide Houses     12.5% Apartments 11.0%

Brisbane Houses     12.9% Apartments 12.5%

If we include the Pre-Covid years, so from Feb 2016 to March 2026 (10 years):

Melbourne Houses 6.3%   Apartments 4.4%

Sydney Houses        6.6%  Apartments 3.5%

Perth Houses           5.8%  Apartments 5.7%

Adelaide Houses     9.2% Apartments 8.2%

Brisbane Houses     9.6% Apartments 8.8%

Here are my conclusions based on the above:

•  Melbourne houses were doing well pre-covid,  then fared very poorly after the lockdowns withtens of thousands leaving, and new property taxes introcuced However, signs of a turning point began emerging in early 2025, with house prices starting to lift.
• Apartments in Melbourne faced oversupply pre-covid, and were doing poorly. They have continued to fare very poorly. (It takes a long time for significant oversupply to be absorbed)
• Sydney houses were doing well both pre and post- covid. Apartments have started to recover post-covid due to a huge price differential with houses, currently 143%. 
• Brisbane benefited greatly from migration into Queensland post-covid, affordable prices helped houses, and and apartments have benefited like Sydney from the big differential with houses
• Adelaide has been a great performer throughout, both houses and apartments with a particular upswing since Covid, as Adelaide was particularly affordable. 
• Perth had a long overdue catch up, and then - like Sydney and Brisbane -  apartments have benefited like Sydney from the big differential with houses

One thing also needs to be said here:

Apartments have done well in all cities except Melbourne, putting paid once and for all the argument "only buy houses."

The gap between houses and apartments in Melbourne is at a historic high. As house prices in Melbourne begin to lift, that gap will increase.

The difference between house prices and apartment prices:

Sydney 143%

Melbourne 96%

Adelaide 90%

Brisbane 65%

Perth 60%

(All houses and all units asking prices SQM Research 1 March 2026)

The bigger the difference, the more the demand for apartments. And that 143% explains precisely why in Sydney apartments have more sales in number than houses.

Melbourne apartments currently offer:

• Strong rental yields (often 6–7%) on the secondary market

• Prices below replacement cost

• Large discounts compared to houses
  

• Nearly 100% different in prices (Houses $1.3M apartments $680K)

• A long period of stagnation (often a precursor to the next upswing)

As Melbourne house prices eventually climb closer toward Sydney levels over time, affordability pressure will again push demand into apartments — just as has happened in Brisbane and  Perth and is starting to happen also in Sydney.

This is how cycles repeat.

Yield vs Growth: Why Most Investors Get Stuck

Many investors struggle to buy more than two or three properties because they chase houses with large land blocks but low rental yields.

A 2% yield on an expensive house creates:

• High mortgages

• Large holding costs

• Cashflow stress

• Which often leads to forced selling

Meanwhile, multiple well-chosen apartments with higher yields can:

• Cover repayments

• Improve borrowing capacity

• Allow portfolio growth

• Reduce emotional pressure

The key is quality selection — not generic high-rise stock with hundreds of identical units, but scarce, well-located properties with genuine land value, or a genuine point of difference, such as a view, design, location. 

<Get my free report: The 6 Golden Rules of Buying a Premium-Performance Apartment on this website HERE>

FOREIGN BUYERS: See my Melbourne Buying Stratgey for NEW apartments HERE! 

If buying numerous properties, the strategy today is different from decades ago. Then because house prices (and mortgages) were significantly lower, you could buy 2 houses or high capital growth properties for every high yield apartment.

Today you need to do one for one.

Where to Buy: 2026–2028

Forget “hot tips” and hype suburbs.

The principles don’t change:

• Property moves in cycles

• The best opportunities feel boring

• Yield supports portfolio growth

• Scarcity drives long-term value

• Capital cities outperform regional towns over long periods

• Apartments periodically outperform houses when price gaps become extreme

If I could only buy one property today on a lower budget I would seriously consider:

• A well-located older apartment in Sydney

• Or a high-quality Premium Performance apartment in Melbourne with strong yield and scarcity

Both markets are setting up for future catch-up cycles — just like Brisbane and Perth did before their booms.

Some of my previous recommendations include:

“Run, don’t walk, into the Perth market” (2004)  (House prices rose by 92% over the next 4 years)

“Sydney is the sleeping giant of Australian property. When it awakens, which will be soon, watch out!”  (2006) (House prices rose by over 90% in the following years)

“Specifically, the Brisbane property cycle appears to have now started its upward trend, which the research shows could be expected to last until around 2027. This creates a wonderful opportunity to invest now and reap the long term benefits. It seems clear that Brisbane has underperformed over the past 5 years, and the catch up could be coming”

 (2017) (House prices rose have risen since then by over 140%)

.

Disclaimer: In compiling this information, Mike Bentley has relied upon information supplied by a number of external sources. All information is of a general nature  and investors are buyers should seek advice from their own professional advisors as to their personal circumstances.  He does not warrant its accuracy or completeness and to the full extent allowed by law excludes liability in contract, tort or otherwise, for any loss or damage sustained by readers, or by any other person or body corporate arising from or in connection with the supply or use of the whole or any part of the information on this page through any cause whatsoever and limits any liability it may have to the amount paid to Mike Bentley for the supply of such information