Wise Advice on Buying an Apartment in Melbourne

Buying an apartment in Melbourne comes with risks, making it crucial to choose wisely and avoid a real estate money pit.

Issues like negative equity, small floor plans, high body corporate fees, poor capital growth, and low rental yields can significantly impact your bottom line—many of which can’t be fixed.

That’s why getting it right the first time is key.

Off-the-plan purchases add another layer of risk, as it’s tough to assess how an apartment will function just from architectural drawings.

On top of that, Melbourne is facing an apartment oversupply, creating a buyer’s market where sellers outnumber buyers.

In 2026, buying an apartment is less about rushing in and more about buying smart.

With the right research, a focus on quality, and a long-term mindset, an apartment can offer both lifestyle value and financial stability.

Take your time, ask the right questions, and choose a property that will still work for you well into the future.

Why High-Quality Apartments Sell for Top Dollar While Generic Units Struggle

In the real estate market, not all apartments are created equal. While well-designed, high-quality apartments often attract premium prices and sell quickly, generic units frequently struggle to generate interest, forcing owners to offer discounts to secure a sale.

What Makes a High-Quality Apartment?

A good apartment stands out due to its superior design, premium finishes, and desirable location. Buyers are willing to pay extra for features such as:

• Spacious layouts that maximize natural light and usability

• High-end materials like stone countertops, timber flooring, and designer appliances

• Desirable locations with proximity to public transport, cafes, and parks

• Building amenities such as pools, gyms, and rooftop terraces

• Strong architectural appeal that enhances long-term value

Why Generic Apartments Get Discounted

On the other hand, generic apartments often struggle to attract buyers at premium prices. These units typically have:

• Basic designs with little character or unique appeal

• Low-quality materials that show wear and tear quickly

• Poor layouts that feel cramped or inefficient

• Less desirable locations with limited lifestyle appeal

• Limited amenities that fail to differentiate them from competitors

Because these apartments lack standout features, they often sit on the market longer, leading to price reductions. Buyers also perceive them as riskier investments with slower capital growth.

The Importance of Standing Out

Investors and homeowners looking for strong resale value should prioritize purchasing quality apartments in well-designed buildings. While premium apartments demand a higher upfront cost, they often provide stronger returns, faster sales, and greater buyer demand in the long run. In real estate, quality always sells, while generic properties struggle to hold their value.

Six Mistakes Buyers Make When Purchasing Apartments

Buying Generic, Oversupplied Apartments
High-rise buildings (10+ floors) with small, poorly lit floor plans are hard to lease or sell at good prices due to an oversupply of similar low-quality stock.

Buying Off the Plan
Off-the-plan purchases come with risks, such as project delays, sunset clauses allowing developers to exit contracts, and unpredictable quality.

Ignoring Sunset Clauses
A sunset clause sets a deadline for settlement, allowing both buyer and developer to walk away if the project isn’t completed in time—potentially leaving buyers empty-handed, even after years of waiting.

Overlooking Fire Cladding Issues
The 2018 Victorian Cladding Taskforce found 354 buildings with low/moderate fire risks and 275 with high/extreme risks. Non-compliant cladding remains a major safety and financial concern for apartment owners. (Download: Victorian-Cladding-Taskforce-Interim-Report-November-2017)

Neglecting Location Factors
Apartments far from key amenities can struggle with demand. A solid investment is within 8km of Melbourne’s CBD, near transport, cafés, schools, shopping centres, parks, or the beach. Even in the CBD, prices can vary significantly based on the street.

Underestimating Ongoing Costs
Many Melbourne apartments have steep body corporate fees—some exceeding $15,000 per year—along with council rates, water rates, and insurance. Structural issues can further devalue properties, making due diligence essential.

Read our article on Melbourne apartment market outlook 2026. 

Apartment Buying Checklist

While some investors avoid apartments due to their low land-to-dwelling ratio, the right one can be a great low-maintenance investment. Apartments are generally more affordable than houses or units, making them a smart choice for those with a smaller budget. However, there are key factors to consider to avoid a bad investment.

General Considerations

• Can you hear noise from neighboring apartments?
• Are the other occupants respectful, especially at night?
• Is the apartment near waste collection areas, and are there any unpleasant smells?

Financial Considerations

• What are the annual owners’ corporation fees?
• Is there an outstanding balance owed to the owners’ corporation?
• Has the owners’ corporation taken on any debt?
• Is there a maintenance fund, and are you required to contribute?
• Are the finances held in a trust or a dedicated bank account?

Owners’ Corporation (OC) Considerations

Owners’ corporation fees can make or break an investment, so understanding them is essential.

• Will you be part of multiple owners’ corporations? (Rare, but possible.)
• Is the car space on the same title as the apartment? If not, ensure you have a legal right to use it.
• What are your voting rights within the OC? Not all apartments have equal voting power.

Management Considerations

• Is the OC manager registered with Consumer Affairs Victoria.
• Are there recurring complaints? Request annual general meeting minutes for insights.
• What are the specific rules of the OC?
• How does the OC handle disputes and complaints?

If the OC chairperson or manager is unwilling to answer questions or seems unhelpful, this may be a red flag.

Maintenance Considerations

• Are any major maintenance projects planned that will require financial contributions?
• Has funding been raised for necessary repairs? (Be cautious of cladding issues affecting many apartments.)
• Are there any visible maintenance concerns? Consider a professional building inspection if unsure.

Doing your due diligence can help ensure you buy an apartment that’s a smart investment—not a financial headache.

Borrowing money can be risky.

When financing an investment unit, size restrictions imposed by lenders can significantly impact loan eligibility. Most lenders require an internal size of at least 40 to 50 square meters to qualify for standard financing. For properties smaller than 40 square meters, obtaining financing becomes more challenging. Lenders often require a minimum 20% deposit to mitigate risk, and the number of institutions willing to approve loans for smaller units is limited. 

If you’re considering buying an apartment in Melbourne consider how a professional property buyer can ensure your success, contact Wise Real Estate Advice for an obligation free chat.