If you are asking should I buy units as an investment, the short answer is: units can be an excellent choice for investors who prioritise rental yield and lower entry costs over long-term capital growth, provided you understand the trade-offs involved. The longer answer depends on your financial goals, timeline, and tolerance for strata living rules. This guide walks through the key considerations so you can make a confident, informed decision.

What Is the Yield vs Growth Trade-Off When Buying Units?

The most important number to grasp before buying any investment property is the relationship between rental yield and capital growth. Units generally deliver higher gross rental yields than houses in comparable suburbs, but they have historically recorded lower capital growth rates over long holding periods.

CoreLogic data indicates that across Australia’s combined capital cities, units produced a gross rental yield of approximately 4.5% in 2025, compared to roughly 3.3% for houses. That yield advantage can meaningfully improve your cash flow position, particularly if you are borrowing at current interest rates. However, the same CoreLogic data shows that over the past decade, house values in capital cities grew at a compound annual rate of around 6.8%, while units grew at closer to 4.2% per annum.

What does this mean in practice? A unit purchased at $600,000 with a 4.5% gross yield generates roughly $27,000 in annual rent before expenses. A house at the same price yielding 3.3% generates around $19,800. Over a five-year hold, the unit investor collects significantly more rent. But if the house grows at 6.8% annually while the unit grows at 4.2%, the total wealth equation shifts in the house’s favour over longer horizons.

The trade-off is therefore time-sensitive. Investors with a shorter horizon, a need for positive or neutral cash flow, or a tighter entry budget often find units a better fit. Those building generational wealth over 15 or 20 years may favour houses or, at the higher end of the scale, explore a unit block investment, which can combine both yield and scale.

How Much Does a Body Corporate Cost and What Does It Cover?

Body corporate fees (called owners corporation fees in Victoria) are a recurring cost that unit investors must budget for carefully. According to the Real Estate Institute of Australia, the national median body corporate levy for a standard apartment sits between $2,500 and $6,000 per year, though older buildings or those with lifts, pools, and concierge services can run well above $10,000 annually.

These fees cover shared building insurance, maintenance of common areas, building management, and contributions to a sinking fund for major future repairs. The sinking fund component is critical: a well-funded sinking fund protects owners from sudden large special levies when significant works are needed, such as roof replacement or facade remediation.

What to Check Before You Buy

• Strata inspection report: Review the owners corporation records for outstanding levies, pending litigation, or major works on the horizon.
• Section 32 / Section 184 certificate (Victoria): This document details annual fees, levies, and any proposed works. In New South Wales, an equivalent Section 184 certificate must be obtained before settlement. Queensland requires a disclosure statement from the body corporate manager attached to the contract, along with an owner’s corporate certificate detailing annual fees and levies.
• Building and compliance reports: In the ACT, it is strongly recommended to thoroughly check the building compliance and pest inspection report accompanying the contract when buying a unit.
• Cooling-off period: Your cooling-off rights vary by state. In Victoria, you have 3 business days. In NSW and Queensland, 5 business days. In the Northern Territory, 4 business days. Units bought at auction are typically excluded from cooling-off rights in all states.

A qualified conveyancer or solicitor can help you interpret these documents before you commit. Never skip due diligence on a strata property, as the shared nature of ownership means one poorly managed committee decision can affect every owner in the block.

Which Investors Are Units Best Suited To?

Units are not a one-size-fits-all investment vehicle, but they genuinely suit a wide range of investor profiles. According to the Australian Taxation Office’s 2024 rental statistics, approximately 65% of individual property investors in Australia own just one investment property, and units represent a significant share of that cohort precisely because of their lower entry price and relative ease of management.

Investors Who Tend to Do Well With Units

• First-time investors who want to enter the market at a lower price point without overextending their borrowing capacity. If this describes you, the guide on buying your first investment property is worth reading alongside this article.
• Cash flow-focused investors who need the rental income to service the loan comfortably, particularly in a higher interest rate environment.
• Inner-city and lifestyle suburb investors who want to target high-demand rental precincts where professionals and students prefer apartment living. Inner Melbourne suburbs like Elwood, Fitzroy, and Richmond consistently record low vacancy rates below 2%, according to SQM Research’s 2025 figures.
• Portfolio diversifiers who already own a house and want to add a higher-yielding asset without the maintenance responsibilities of a standalone property.
• SMSF investors, where cash flow compliance and predictable income streams are often a structural requirement of the fund’s investment strategy.

When Units May Not Be the Right Call

• If you are buying in a suburb with a very large pipeline of new unit supply, rental vacancy can rise and capital growth can stall. RBA reports have noted that apartment oversupply in certain Brisbane and Melbourne CBD precincts contributed to flat unit values between 2018 and 2022.
• If the building is older and the sinking fund is inadequate, you may face a large special levy within your first few years of ownership.
• If your primary investment goal is long-term land value appreciation, a house or a unit block in Melbourne may provide better land-to-asset ratios.

Is Now a Good Time to Buy Units in Australia?

Market timing is always context-dependent, but several indicators from 2025 and into 2026 suggest conditions for unit investors are reasonably favourable. According to Herron Todd White’s October 2025 national property review, most major Australian capital cities are in a rising or peak market phase for units, with demand driven by persistent rental shortages, strong interstate and overseas migration, and the relative unaffordability of houses pushing more renters into the apartment market.

SQM Research’s 2025 data shows national residential rental vacancy sitting at just 1.1%, a near-record low. This means well-located units face very short vacancy periods between tenancies, reducing an investor’s holding costs significantly.

Interest rate movements remain a key variable. The RBA began a cautious easing cycle in early 2025, and Herron Todd White’s review notes that even modest rate reductions have improved buyer sentiment and borrowing capacity, supporting both prices and investor activity across the unit market.

For a broader view on current conditions, the article on whether now is a good time to buy investment property covers the macroeconomic picture in detail and is worth reading before you commit to a purchase strategy.

What Are the Key Due Diligence Steps Before Buying a Unit?

Beyond the strata-specific checks covered above, buying a unit as an investment requires the same rigorous financial and legal analysis as any property purchase, plus a few strata-specific layers.

Financial Analysis Checklist

1. Calculate the net yield (not just gross yield) by factoring in body corporate fees, council rates, property management fees, insurance, and maintenance.
2. Request the last two years of body corporate meeting minutes to identify recurring issues, disputes, or planned capital works.
3. Check the sinking fund balance relative to the building’s age and condition. A 30-year-old building with a $20,000 sinking fund and ageing common infrastructure is a red flag.
4. Review the building’s insurance policy to confirm it covers the replacement value of the entire structure.
5. Assess the rental demand in the immediate precinct. Walk distance to public transport, universities, hospitals, and employment hubs drives tenant demand for units specifically.
6. Compare the asking price to recent comparable sales (not just asking prices) in the same building and on the same street.

If you are uncertain whether to buy a single unit or scale up to a multi-unit holding, the detailed comparison in should I buy a block of units or individual properties outlines the pros and cons of each structure in plain language.

Conclusion

Units can be a smart, accessible, and income-generating investment when chosen carefully and in the right location. The higher yields relative to houses make them attractive for cash flow investors and those entering the market for the first time, while the body corporate structure means you trade some control for shared maintenance responsibilities. The critical variables are the quality of the strata management, the strength of rental demand in the suburb, and your own investment timeline. Do thorough due diligence on strata records, obtain all required certificates for your state, and model the net (not gross) yield before making an offer. A well-selected unit in a tightly held, high-demand suburb can deliver consistent income and respectable long-term growth over a patient holding period.