How Apartments Are Valued in Australia — What Moves the Number

An apartment is not valued the way a house is. A house carries most of its worth in the land underneath it; an apartment carries very little land and a great deal of building — shared structure, shared finances, and a set of risks that live in the owners corporation rather than on the title. That is why two apartments with identical floorplans in the same suburb can be worth tens of thousands of dollars apart, and why an off-the-plan apartment can be worth less at settlement than the price on the contract. This guide explains how a professional residential valuation of an apartment actually works, what moves the number, and where the traps sit — with a Melbourne focus, since that is where the questions cluster.

What is an apartment valuation?

An apartment valuation is an independent assessment of the market value of a strata-titled unit — an apartment, flat or unit that shares a building and land with other lots under an owners corporation (called a body corporate or strata scheme depending on the state). Like any residential valuation it estimates the price the specific lot would achieve in an arm’s-length sale at the valuation date, but it does so mainly by direct comparison with recent sales of similar units, adjusting for the factors below. It is used for lending, pre-purchase decisions, SMSF compliance, family law, and capital gains tax.

The method: direct comparison, not land value

Houses and standalone dwellings can be cross-checked against the value of their land. An apartment can’t — its share of land is small and notional, so the valuer leans almost entirely on the direct comparison approach: recent settled sales of comparable units, ideally in the same building or a closely comparable one, adjusted for size, floor level, aspect, car spaces, condition and the state of the owners corporation.

This is why the gap between houses and apartments has widened so far. Across the combined capital cities, the median house was $1,091,000 against a median unit of $728,000 in late 2025 — a house premium of roughly 50%, up from about 20% five years earlier (Cotality). Houses have been repriced for their land; apartments haven’t. In Melbourne specifically, the median house sits around $950,000 against a unit median near $620,000 (Cotality, mid-2026).

One caveat worth stating plainly, because it cuts against the lazy “apartments always underperform” line: through the twelve months to mid-2026, units actually outgrew houses in Perth, Brisbane, Adelaide and Sydney as affordability pushed buyers toward them (Cotality). The long-run land story and the current-cycle affordability story point in opposite directions — which is exactly why a current, property-specific valuation beats any rule of thumb.

The strata factors a house never has

Inside a building, near-identical units diverge in value on things that simply don’t apply to a house:

• Floor level, aspect and light. Higher floors, a north or east aspect, natural light and an open outlook all carry a premium; a low floor facing a light well or a neighbouring wall discounts.
• Car space and storage. In inner-city buildings a secure car space and a storage cage are valued as separate, often substantial, components — their presence or absence can move a unit by a five-figure sum.
• Building age, lifts and amenities. A pool, gym or concierge adds appeal but also adds cost, which feeds into the next point.
• Owners corporation fees. High quarterly fees depress value — a buyer prices in the ongoing cost.
• The sinking (capital works) fund. An underfunded fund is a red flag: it signals a future special levy, and a valuer (and a careful buyer’s conveyancer reading the strata records) treats that as a downward pressure on value. Special levies for waterproofing, lift replacement or facade work can run to thousands or tens of thousands of dollars per lot.
• Building defects. Water ingress, structural and waterproofing defects hit both value and saleability hard.

Combustible cladding — a Melbourne-specific value risk

Unresolved combustible cladding is one of the sharpest value risks a modern apartment can carry: some lenders decline to lend against a building with unrectified combustible cladding, which shrinks the buyer pool; insurance becomes harder and dearer; and remediation is funded by special levies or strata loans running into tens of thousands of dollars per lot. Victoria’s remediation program addressed more than 99% of the highest-risk buildings and rectified around 450 private residential buildings before Cladding Safety Victoria was wound up in May 2026 (the Cladding Safety Victoria Repeal Act received assent on 19 May 2026), with its functions moving to the Building and Plumbing Commission. For a valuer, the live question on any post-2000 tower is simply: has the cladding been resolved, and is that documented?

The off-the-plan settlement trap

Buy an apartment off the plan and you sign a contract years before the building exists. At settlement, the lender values the finished apartment as at that date — not the contract price you agreed back then. If that valuation comes in below your purchase price, the bank lends against the lower figure and you must cover the shortfall in cash.

Two things make this worse than buyers expect. First, developer incentives don’t lift the valuation: rebates, cashback, free furniture and rental guarantees are marketing, and a valuer assesses against comparable sales regardless — a unit listed at $640,000 with a $40,000 cashback may simply value at $600,000. Second, shortfalls concentrate in flat or oversupplied high-rise markets (inner Melbourne and inner Brisbane have been the classic examples), precisely where a lot of off-the-plan stock settles at once. The defence is boring but effective: get your finance and a view on value confirmed before you sign, not at settlement. A pre-purchase valuation does exactly that.

Short-stay and lending wrinkles

Two more things specific to apartments, both able to change what an investor’s unit is worth:

• Short-stay income is no longer a given in Victoria. Since 1 January 2025 a state Short Stay Levy of 7.5% applies to bookings under 28 days (a principal place of residence is exempt), and — separately — an owners corporation can ban short-stay letting in the building by a 75% special resolution. An investor buying for Airbnb income needs to check the OC rules before buying: the building may have voted that model out.
• Small units and dense postcodes are harder to finance. Lenders focus on internal area (excluding balcony and car space) and many get cautious below about 50 square metres, with studios under 40 sqm often needing much larger deposits or fewer available lenders. Inner-city high-rise postcodes can also attract lender caps on how much they’ll lend. None of this is a fixed rule — it varies by lender — but it shapes the buyer pool, and therefore value.

When you’ll need an apartment valuation

The comparison-driven, strata-aware number matters most when the stakes are real: a pre-purchase or auction decision; a mortgage or refinance; an SMSF holding that needs an annual market value for the ATO; a family law settlement that has to withstand scrutiny; or a capital gains tax event. In each case the automated estimate a portal shows you — built on a model that never saw your building’s cladding status or sinking fund — is not the number that will hold up.

Frequently asked questions

How is an apartment valued in Australia?

By direct comparison: a valuer analyses recent settled sales of similar units, ideally in the same or a closely comparable building, and adjusts for size, floor level, aspect, car spaces, condition and the state of the owners corporation. Unlike a house, an apartment carries little land value, so the comparison to other units does almost all the work.

Why is my apartment worth less than a house in the same suburb?

Because a house’s value is mostly its land, and an apartment’s is mostly its building. Across the capital cities the median house was about 50% more expensive than the median unit in late 2025, up from around 20% five years earlier (Cotality) — houses have been repriced for scarce land while apartments have not. The gap is structural, not a comment on your specific apartment.

What is an off-the-plan settlement shortfall?

It is when the lender’s valuation of a finished off-the-plan apartment, assessed at settlement, comes in below the price you contracted to pay years earlier. The bank lends against the lower valuation, so you must fund the difference in cash. Developer incentives like cashback or free furniture don’t raise the valuation, because valuers assess against comparable sales.

Do owners corporation fees and special levies affect an apartment’s value?

Yes. High ongoing fees depress value because buyers price in the cost, and an underfunded sinking (capital works) fund signals a likely future special levy — which a valuer and a diligent buyer treat as downward pressure. Unresolved building defects or combustible cladding can hit both value and the ability to get finance.

Does short-stay letting affect an apartment’s value in Victoria?

It can. Since 1 January 2025 Victoria applies a 7.5% Short Stay Levy to bookings under 28 days, and an owners corporation can ban short-stay letting entirely by a 75% special resolution. An investor relying on short-stay income should confirm the building’s rules before buying, because that income stream may not be available.

Sources

• Cotality (formerly CoreLogic) — Home Value Index and Chart Pack — house vs unit medians, the house premium, capital-city growth by dwelling type
• Australian Bureau of Statistics — Total Value of Dwellings — national dwelling stock and mean price
• State Revenue Office Victoria — Short stay levy — 7.5% levy from 1 January 2025, under-28-day bookings, PPR exemption
• Consumer Affairs Victoria — Owners corporations and short-stay accommodation — short-stay ban by special resolution
• Cladding Safety Victoria — remediation program status and 2026 transition to the Building and Plumbing Commission

This article is general information, not property, financial or lending advice. Apartment value depends on the specific lot, building and owners corporation, and market conditions at the valuation date — obtain an independent valuation for your unit before acting.

See also

• What Is a Property Valuation? — the fundamentals behind every valuation
• How Commercial Property Is Valued — the income approach, for comparison
• Pre-Purchase Valuation Before Auction — confirming value before you commit
• Property Valuation for a Mortgage — how lender valuations work
• Capital Improved Value vs Market Value — why your rates notice isn’t your apartment’s market value

Last verified: 21 July 2026. Market figures are point-in-time (Cotality and ABS, 2025-2026 releases) and move each quarter; the Victorian short-stay and cladding settings are current as at this date. This article is reviewed against new data releases.