At 31 May 2026, the median capital city house was worth 53.5% more than the median capital city unit. Three months later that premium was 50.2%. The gap fell from $409,760 to $375,504, a compression of $34,256 in one quarter and the fastest the house premium has closed this cycle. Over the year to 31 August 2026, unit values beat house values in seven of the eight capitals, Canberra the only exception.
That changes the question. For six years the interesting fact about units was that the discount kept widening. It is now narrowing, so the discount in front of you is smaller than the one your neighbour got in autumn. This article gives you the numbers city by city, the mechanisms behind them, and a test for whether a specific unit's discount is value or a warning. It will not tell you which to buy. That depends on the building.
The gap right now, city by city
Cotality's hedonic index put the combined capitals median house at $1,123,772 and the median unit at $748,268 at 31 August 2026. The aggregate hides an enormous spread: the house premium runs from 33.2% in Hobart to 72.0% in Canberra.
| Capital | Median house | Median unit | Dollar gap | House premium |
|---|---|---|---|---|
| Sydney | $1,494,878 | $878,176 | $616,702 | 70.2% |
| Melbourne | $920,432 | $629,054 | $291,378 | 46.3% |
| Brisbane | $1,180,552 | $854,721 | $325,831 | 38.1% |
| Adelaide | $999,091 | $684,469 | $314,622 | 46.0% |
| Perth | $1,043,478 | $733,223 | $310,255 | 42.3% |
| Hobart | $798,156 | $599,373 | $198,783 | 33.2% |
| Darwin | $755,296 | $478,713 | $276,583 | 57.8% |
| Canberra | $1,007,652 | $585,937 | $421,715 | 72.0% |
| Combined capitals | $1,123,772 | $748,268 | $375,504 | 50.2% |
Source: Cotality Home Value Index as at 31 August 2026, premiums calculated from those medians. Never mix these with Domain, PropTrack or My Housing Market numbers: My Housing Market's Sydney house median for the August quarter was $1,641,767 against Cotality's $1,494,878, and neither is wrong.
Canberra and Sydney sit at the extreme because both have large, young apartment stocks next to constrained detached-house land. Hobart and Brisbane sit at the other end because their unit stock is smaller, older and more often walk-up brick, which behaves more like a house than a tower.
What actually moved over the last twelve months
At the aggregate level the performance gap has essentially gone. In the year to 31 May 2026, combined capital house values were up 8.5% against 5.6% for units. By the year to 31 August, those numbers were 1.1% and 0.9%.
| Capital (12 months to 31 Aug 2026) | Houses | Units | Better performer |
|---|---|---|---|
| Sydney | -5.5% | -2.3% | Units |
| Melbourne | -5.7% | -2.5% | Units |
| Brisbane | +10.3% | +13.2% | Units |
| Adelaide | +8.6% | +9.0% | Units |
| Perth | +15.6% | +16.0% | Units |
| Hobart | +7.9% | +8.7% | Units |
| Darwin | +13.1% | +18.0% | Units |
| Canberra | -0.4% | -0.9% | Houses |
Source: Cotality Home Value Index, 12 months to 31 August 2026.
Over the three months to August, capital city house values fell 4.0% while units fell 2.6%, and units fell less in seven of eight capitals. Perth was the exception, with houses down 3.0% and units down 4.1%.
The headline conceals the mechanism. Units are not rising while houses fall. In Sydney and Melbourne both are falling, and units are falling more slowly. This is a correction taking land value down faster than air rights, not a re-rating of apartments. National values have fallen for five straight months to sit 3.6% below the March 2026 peak, with 93% of capital city suburbs down over winter. Our guide to buying in a falling market covers what that does to your leverage.
Why the gap opened after 2020
Three forces did it, and all three are now weaker. Households wanted a study, a yard and distance from neighbours and they bid for it, a genuine repricing of amenity but a one-time step change that has now been paid for. Near-zero rates made the extra $300,000 that turns a unit budget into a house budget almost free to service, and cheap credit lifts the dollar price of the most expensive asset most. Meanwhile unit supply was squeezed from both ends: costs made mid-rise apartments marginal to build, and defect scandals made buyers wary of the ones built anyway.
The scale is routinely overstated. Cotality puts national growth over the five years to September 2025 at 53.8% for houses against 27.1% for units, roughly double, not the triple still circulating. For the long-run wealth argument, see our piece on Australia's $12 trillion property milestone.
Why the gap is closing now
The affordability ceiling pushed buyers down the ladder. Servicing a new mortgage on a median house nationally took 48.7% of gross household income in September 2025, against 36.8% for a unit, and in Sydney 68.1% against 38.7%. Saving a 20% deposit took an estimated 11.9 years for a house and 9.0 for a unit, against 8.9 and 8.0 five years earlier. Eventually the house stops being reachable.
Credit rules bind hardest on the biggest loan. Since 1 February 2026, APRA has limited each bank to writing 20% of new lending at debt-to-income ratios of six times or higher, and the cash rate is 4.35% after three increases during 2026. That stops nobody buying a house, but it makes the marginal high-DTI loan harder to place, and high-DTI loans are overwhelmingly house loans. Ask a mortgage broker where your file sits in a lender's quarterly quota.
The correction started at the expensive, land-rich end. Upper-quartile values fell 3.2% nationally over the three months to July 2026 while lower-priced homes rose 0.3%. Do not over-read that: by August, Cotality noted the quartile gap had narrowed and lower-priced housing was becoming less insulated. The top fell first, not alone. Our analysis of the two-speed market tracks the split.
And the First Home Guarantee caps now land on unit stock in half the capitals. Since 1 October 2025 the scheme has had no income test and no cap on places, so the price cap is the only real gate.
| Capital | Price cap | Median house | Median unit | Median house in scope? |
|---|---|---|---|---|
| Sydney | $1,500,000 | $1,494,878 | $878,176 | Yes, by $5,122 |
| Melbourne | $950,000 | $920,432 | $629,054 | Yes |
| Brisbane | $1,000,000 | $1,180,552 | $854,721 | No |
| Adelaide | $900,000 | $999,091 | $684,469 | No |
| Perth | $850,000 | $1,043,478 | $733,223 | No |
| Hobart | $700,000 | $798,156 | $599,373 | No |
| Darwin | $750,000 | $755,296 | $478,713 | No, by $5,296 |
| Canberra | $1,000,000 | $1,007,652 | $585,937 | No, by $7,652 |
Sources: firsthomebuyers.gov.au caps (capital city rate) and Cotality medians at 31 August 2026.
The common claim that these caps are unit-only is wrong in half the country. Because values have fallen, the New South Wales cap now sits just above Sydney's median house and the Victorian cap above Melbourne's, while Canberra and Darwin are within about 1% of theirs. The caps genuinely exclude the median house only in Brisbane, Adelaide, Perth and Hobart. Caps move, so check the current First Home Guarantee rules before relying on them.
Is this discount value, or a warning?
A unit priced 40% below the local house median can be a bargain or a liability, and the price will not tell you which. These seven checks will.
Land share. Land-to-asset ratio is a buyer's-agent way of thinking, not a published statistic, and any percentage quoted at you is illustrative rather than measured. The logic holds anyway: a block of six on a large site gives each owner real land, a 200-unit tower almost none. Divide the site area by the lot count.
The sinking fund against the plan. Since 1 April 2026, New South Wales schemes must use a standard form for the ten-year capital works fund plan, and it cannot assume reliance on special levies or loans. Compare today's balance with the next three years of scheduled spend. A fund holding $80,000 against a $400,000 remedial program is a special levy with a delay on it.
Size and age of the scheme. Small schemes have no economies of scale and often no reserves. Large towers carry lifts, plant, pools and fire systems that cost money forever. Buildings registered from 2018 to 2021 are the highest-risk cohort in the New South Wales data.
Defect and cladding history. Ask for minutes from the last three annual general meetings, not just the strata report, and search for waterproofing, cladding, rectification and building bond.
Investor concentration. The strata roll shows how many lots have an address for service that is not the unit itself. A building that is 80% investor-owned votes for the lowest levy that passes. That is how deferred maintenance happens.
Short-stay load. Since 1 January 2025, Victorian owners corporations can ban short stays with 75% support of lot owners, except a host's principal place of residence, and Victoria charges a 7.5% levy on bookings under 28 nights. New South Wales caps non-hosted short-term rentals in Greater Sydney at 180 days a year. Check whether your building has voted, and whether it enforces. Our guide to the 2026 short-stay rules covers the states.
The pipeline within walking distance. Apartment approvals were up 19.9% year on year in July 2026 against 6.0% for houses, though approvals are not completions: commencements fell 20.7% in the March quarter. A live crane 400 metres away is competing stock, and the ABS's only estimate of build times, from 2018-19 and never updated, put apartments at 6.66 quarters against 2.22 for houses. If that stock is selling now, our guide to buying off the plan explains the developer's incentives.
That is the work a good GoMatch buyer's agent does before you fall in love with a floorplan. Reading three years of minutes is unglamorous and decisive.
What has structurally changed, and what has not
Genuinely better: the defect picture for new New South Wales stock. The 2025 Strata Defects Survey found 53% of surveyed buildings had a serious defect, unchanged since 2023, and that headline gets quoted endlessly. The useful number sits underneath it: among buildings registered between 2022 and 2024, waterproofing defects appeared in 22% against 52% for 2018 to 2021 registrations, fire safety in 16% against 32%, and non-compliant cladding in 0% against 2%. New stock is measurably better built. Governance improved too, with independent certification of maintenance schedules for larger schemes and an end to undisclosed insurance commissions from 1 January 2026. Our breakdown of the NSW strata reforms has the detail.
What has not changed matters more. Neither headline defect-protection reform covers a building you can inspect today. Victoria's 2% developer bond applies only to projects permitted from 1 July 2027, and New South Wales passed its decennial liability insurance framework but as at 18 August 2026 no product had cleared regulatory approval. A 2026 buyer of a 2019 tower is protected by exactly what they were protected by in 2019.
On levies, ignore the percentages circulating online. No statistical agency tracks average Australian strata levies, and the quoted figures come from marketing pages. For good buildings 2026 runs the other way: broker outlooks report premium reductions for well-maintained, claim-free schemes, while buildings with unresolved defects or a poor claims history get no relief. Price the building, not the sector.
When the house is still the better buy
If you can service it without a six-times-income loan and intend to hold ten years or more, land wins on arithmetic that has not changed. You control the site, you can extend, and nobody votes to spend your money.
Buy the house if you need three or more bedrooms and the unit alternative is a two-bedroom compromise, because that trade rarely stays temporary. Buy the house if your city's premium is already narrow, since Hobart at 33.2% and Brisbane at 38.1% offer little discount for what you give up. Buy the house if the only units nearby sit in a heavy pipeline or in the 2018 to 2021 cohort.
Buy the unit if the cap or your borrowing capacity makes a house a five-year wait, or if the building passes the seven checks. Gross yields at 31 August 2026 ran 4.6% for capital city units against 3.3% for houses, the highest national reading since September 2019. Cotality still notes yields in the larger capitals sit below neutral cash flow, so this is a smaller loss, not an income. We made the value argument for Melbourne separately.
What these numbers cannot tell you
Every figure here is a median or an index, and you will not buy a median. Cotality's hedonic index estimates a value for the whole stock, including homes nobody is selling, which makes it excellent for direction and useless for what one apartment is worth on a Saturday. Two units in the same building can sit 15% apart on aspect and floor alone.
Three months of faster compression is a trend, not a rule, and it would reverse if rates fell. Cotality does not publish a house-versus-unit split of its change-from-peak or five-year columns, so any per-city cumulative comparison for this cycle, including ones derived here, is a calculation rather than a citation. None of this replaces a strata report, an inspection and a solicitor. Aggregates tell you which questions to ask. The building answers them.
FAQ: houses versus units in 2026
Is the gap between house and unit prices closing in Australia?
Yes, at the aggregate level. The combined capital city house premium peaked at 53.5% at 31 May 2026 and fell to 50.2% by 31 August, with the dollar gap narrowing from $409,760 to $375,504. Units beat houses in seven of eight capitals over the year. The mechanism is that houses are falling faster, not that units are rising.
Are units a better buy than houses right now?
Neither is better in general. Units offer a smaller price, a lower deposit hurdle and gross yields near 4.6% against 3.3% for capital city houses. Houses offer land and control. The answer depends on your borrowing capacity, your hold period and the building's sinking fund, defect history and investor concentration.
Can I use the 5% deposit scheme to buy an apartment?
Yes, and in Brisbane, Adelaide, Perth and Hobart an apartment may be your only option, since the median house exceeds the cap in all four. Capital city caps are $1,500,000 in New South Wales, $1,000,000 in Queensland and the ACT, $950,000 in Victoria, $900,000 in South Australia, $850,000 in Western Australia, $750,000 in Darwin and $700,000 in Tasmania.
Do apartments actually go up in value in Australia?
They do, more slowly than houses over five years and faster over the past twelve months. Unit values rose 27.1% nationally in the five years to September 2025 against 53.8% for houses. Building quality separates the units that grow from the ones that stall, which is why the strata report matters more than the suburb.
Where this leaves you
For six years the argument for a unit was structural: the discount kept widening and houses kept running away. That argument has weakened. The discount is $34,256 smaller than in May, and the aggregate performance gap has closed to almost nothing.
The useful question is no longer whether units are cheap relative to houses. It is whether this unit is cheap relative to what it costs to own and what it will cost to fix. The answers sit in the capital works plan, three years of minutes, the strata roll and the site area divided by the lot count.
Do that work before you offer, in either direction. The market is giving buyers more time than it has in years, with listings up about 24% on a year ago. For a second read on which signals matter, start with the five market signals every buyer should learn to read.
Sources
- Cotality, "Home Value Index", index results as at 31 August 2026. Released 1 September 2026.
- Cotality, "Home Value Index", index results as at 31 May 2026 and 30 November 2025.
- Cotality, "Housing Affordability Report Australia". November 2025.
- Australian Government, "First Home Guarantee property price caps", firsthomebuyers.gov.au. Accessed 2 September 2026.
- Building Commission NSW and Strata Community Association NSW, "2025 Strata Defects Survey". Published April 2026.
- NSW Fair Trading, "Changes to strata laws". Commencing 1 April 2026 and 1 October 2026.
- Australian Bureau of Statistics, "Building Approvals, Australia, July 2026". Released 1 September 2026, and "Building Activity, Australia, March 2026", released 8 July 2026.
- Australian Prudential Regulation Authority, "APRA to limit high debt-to-income home loans to constrain riskier lending". 27 November 2025.
