For a lot of first home buyers, especially in Sydney, the choice comes down to an apartment close to work or a house further out. Lifestyle is a big part of that decision, but there are also lending and financial differences that people often don't hear about until they apply.
Price and borrowing power
Apartments are usually cheaper to buy. In most capital cities, the median unit costs well under the median house. That means a smaller deposit, a smaller loan and lower repayments.
But strata levies count against your borrowing power. A $700,000 apartment with $1,500 a quarter in levies may have similar affordability to a slightly cheaper house without levies, once the lender factors in that ongoing cost.
Capital growth
Over long periods, houses in Australian capitals have generally grown faster than apartments, because the land component appreciates while buildings depreciate. Apartments have a smaller share of land per dwelling.
That said, well-located apartments in tightly held areas can grow solidly, and in 2026 the more affordable end of the market has held up better than expensive homes. Cotality's September 2026 data showed high-end homes leading the downturn while lower-priced properties were more resilient.
Lender restrictions on apartments
This is where many buyers get caught.
Minimum size. Many lenders have minimum internal living areas, often around 40 to 50 square metres excluding balcony and car space. Below that, they may lend at a lower LVR or not at all.
High-density postcodes. Some lenders limit LVRs in postcodes with lots of new apartment supply.
Serviced apartments and student accommodation. Most mainstream lenders won't lend on these, or only with a large deposit.
Building defects. If the strata report shows major defects or legal action, some lenders will decline or reduce the loan.
A house on a normal block rarely runs into these issues.
Ongoing costs
Apartments: strata levies cover building insurance, maintenance and the sinking fund. Special levies can arrive for big repairs.
Houses: you pay for insurance, maintenance and repairs yourself. They're less predictable but you're in control.
Over a year, the total can be similar. The difference is that apartment costs are fixed and visible, while house costs come in lumps.
Scheme eligibility
Both apartments and houses can qualify for:
- The 5% Deposit Scheme
- Help to Buy
- NSW stamp duty exemption up to $800,000
The NSW First Home Owner Grant only applies to new homes up to $600,000, which in Sydney often means a new apartment rather than a house.
Lifestyle questions
- Will you need more space in 5 years? Kids, a home office, a dog?
- How important is a short commute?
- Do you want a garden to look after, or would you rather not?
- How do you feel about strata rules on pets, renovations and noise?
Moving costs money. Stamp duty on your second home won't be exempt. If a one-bedroom apartment will feel cramped in two years, a townhouse or small house might be the better long-term buy.
A middle ground: townhouses and villas
Townhouses and villas often offer more land share than apartments, lower strata costs, and a lower price than a freestanding house. Lenders generally treat them like houses, without the small-apartment restrictions.
Frequently asked questions
Can I buy a studio apartment with a 5% deposit?
Possibly, but many lenders won't lend 95% on very small units. Check the internal size before you bid.
Do strata fees really affect what I can borrow?
Yes. Lenders include them as a regular expense.
Are new apartments a good first home?
They can be, and may qualify for the First Home Owner Grant. Check the developer's track record and be aware the valuation at settlement might come in below the contract price.
Weighing up an apartment against a house? Call Finfident on 02 6416 2142, or Call, Text or WhatsApp 0424 545 654. We'll show you what each means for your borrowing power and which lenders will finance it.
Want to know if this applies to you?
Talk it through with a Finfident broker. It's free and there's no obligation.
