In 2025, apartments are having a moment.
In the year to May 2025, apartment values grew faster than house values in almost two-thirds of council areas across Australia’s capital cities – a striking reversal of the recent pattern of house prices rising faster.
From affordability challenges to changing buyer preferences, there are many factors contributing to apartments’ growing appeal among today’s property buyers.
Here’s what they are.
Affordability: the gap between house and apartment prices
Over the past five years, apartment values have lagged far behind house values when it comes to price growth. By mid-2025, there was a 45% gap (equivalent to $692,000) between Sydney’s median house and apartment prices according to PropTrack – the largest it had ever been.
Here in Sydney’s inner-east, the gap between apartment and house values is much wider still – often due to high land values and the scarcity of houses.
For example, in Darlinghurst, the median apartment price is $955,000 while a house will set you back 2.8 times more, at $2,670,000. In Bondi, the median apartment price is $1,417,500, while the median house price is $4,245,385, almost three times as much. In Bronte the median apartment sells for $1,695,000, but the median house costs almost 3.5 times that, at $5.9 million.
This lack of affordability, coupled with the overall rising cost of living, is driving the popularity of apartments. Buyers find they can get all the benefits of living in a prime eastern suburbs location at a fraction of the cost.
Changing preferences means a greater pool of buyers
In 2025, apartments appeal to a wider range of buyers than they once did – and the apartment market is no longer as influenced by investors as it once was.
Many first home buyers who want to live in a prime area, like Sydney’s eastern suburbs, find their budget doesn’t stretch to a house. No surprise then, that a 2024 survey from realestate.com.au revealed that 72% of Australians would consider an apartment for their first home.
Government schemes – from stamp duty concessions to the Commonwealth-backed First Home Guarantee – also make apartments a more attractive option for eligible buyers. This is particularly true of off-the-plan or new build apartments, which can be eligible for the First Home Owner Grant.
At the upper end of the apartment market, downsizer demand is playing a major part – particularly in luxury penthouses and large three-bedroom apartments. These buyers are often in a position to act decisively, having just sold the family home. They also tend to have specific requirements, including spaciousness, privacy, lift access and proximity to amenities.
When an apartment comes to market that meets prestige downsizers’ requirements, it is almost always hotly contested.
But Sydney’s inner city market is not only the domain of empty nesters, first-home buyers and investors. Increasingly, families are choosing apartments for the low maintenance lifestyle they offer.
Many younger buyers with children are looking to skip the suburban family home for the convenience of inner city living and are embracing long-term apartment living. Others are actually selling up the family home and competing with downsizers at the top end of the market.
Developers are starting to respond, by providing larger two or three or even four bedroom layouts designed with long-term living in mind. We even see some buyers take things into their own hands, remodelling and amalgamating two apartments into one.
New apartment markets opening up
Here in Potts Point apartments have always been in high demand and comprise the majority of the housing stock. But we’re also seeing apartment buyers become very interested in other parts of the eastern suburbs, where houses once dominated.
For instance, there is growing demand for beachside apartments, with both Tamarama and Bronte making the top 10 suburbs nationally for apartment buyer demand.
Tamarama’s median apartment value has grown 22.7% over the past 12 months, Bronte’s has grown 10.6% and Maroubra’s has risen 13.1%.
We’re seeing the same trend play out in the most established eastern suburbs too: Darling Point’s median apartment value has risen 24.5% in the last 12 months, while Woollahra’s has risen 13.9%.
This demonstrates the shift in focus with buyers actively seeking apartments over houses near the eastern beaches. And, we expect it may influence development decisions around the beaches over the coming years.
More options: An apartment for every budget and lifestyle
A suburb’s median apartment value only tells you so much. The truth is, in 2025, the market for apartments is diverse and there is something for almost everyone.
Take Potts Point, for example. The suburb’s overall median apartment price sits at $805,000, but the headline number hides a remarkably wide spread of options.
At the entry level, studios start from around $450,000, appealing to investors, young buyers or those wanting a city bolt hole. One-bedroom apartments, with a median of $705,000, are popular with both first-home buyers and long-term investors.
Step up to two bedrooms, and you’re in the $1.4 million range (roughly twice the one-bed median) and often the sweet spot for professional couples and small families.
Three-bedroom apartments, often bought by downsizers, are scarce and highly competitive, with a median of $2.495 million, or three times the overall suburb median.
Then there’s the prestige market, where penthouses with harbour or city views can command anywhere from $10 to $12 million or more – with the suburb record now sitting at $30 million.
In short, like most suburbs in Sydney’s east, Potts Point’s apartment market isn’t one-size-fits-all – it’s a complete ecosystem. And that’s another thing that makes it so appealing.
Changing policy: More apartments are on the way in Sydney’s east
As we wrote earlier this year, recent NSW government planning reforms will unlock 112,000 new homes across transport corridors and high-opportunity areas in NSW, including here in Sydney’s East.
Suburbs like Double Bay, Edgecliff, Rose Bay, Darlinghurst, Paddington, Kings Cross, Redfern, Surry Hills and Bondi Junction will have more development permitted under the Low- and Mid-Rise House Policy. This will pave the way for more terraces, manor houses and apartment blocks of up to six-storeys within 800m of transport hubs.
But the biggest news comes for Woollahra. In August, the state government announced that Woollahra Station (which lay dormant for 50 years) will finally be completed and opened, paving the way for rezoning the surrounding land for 10,000 new homes. While details are yet to be finalised, rezoning will allow for up to 21-storey buildings, so it’s likely much of this new housing will be in the form of apartments.
The policy changes will transform the streetscapes and lifestyles of some parts of the eastern suburbs, bringing much-needed housing and making apartment living more common, too.
But while many people are understandably concerned that an influx of new apartments will negatively impact property prices, we don’t think that will be the case. In fact, the reverse may be true – more apartments could actually increase the value of surrounding houses and established apartment complexes, due to their relative scarcity.
Want more?
If you’re considering buying or selling in Sydney’s East, contact my team for expert guidance.
