One of the most common questions I get as a broker is, "Should I buy an apartment?"
This usually comes from first home buyers who are trying to balance price, location, and future value. The truth is, banks treat apartments differently depending on the size, location, and type of building.
Generally, apartments in smaller blocks in well-established areas tend to perform steadily. They may not grow in value as strongly as houses, but that doesn't mean they are a bad purchase, especially for someone buying their first home.
Why Banks See High-Rise Apartments as Risky
Buying an apartment in a high-rise can seem like a smart move—affordable entry point, low maintenance, often in a central location. But when it comes to getting a home loan, you might find the bank doesn’t share your enthusiasm. In fact, some lenders see high-rise apartments as higher risk—and they treat them differently.
Let’s break down why.
1.Oversupply and Market Volatility
Many high-rise apartments are built in large numbers and concentrated in CBDs or inner-city hubs. When too many identical apartments flood the market, it can drive prices down. That oversupply makes resale values less predictable, which is a red flag for lenders who want to make sure their security (your property) holds its value.
2. Smaller Floor Plans and Build Quality Concerns
Some high-rise apartments, especially in newer developments, are built to maximise quantity over quality. Banks look at things like:
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Floor size (many don’t lend on apartments under 40m²)
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Overall construction quality
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Potential for defects (think flammable cladding or structural faults)
If there’s any uncertainty about the long-term integrity of the building, lenders pull back.
3. Strata and Management Risks
Buying into a high-rise means becoming part of a strata scheme. If the building has:
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Poor financial management,
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Legal issues,
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High ongoing levies, or
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A history of special levies for repairs,
it can affect your borrowing capacity—or even your ability to sell later.
4. Investor Heavy Buildings
Lenders often avoid buildings dominated by investors and renters, especially if more than 30–50% of the units aren’t owner-occupied. Why? These buildings are considered more vulnerable to sharp drops in value during downturns because investors are quick to offload properties when the market shifts.
5. Location and Future Value Risk
Not all apartments are treated equally. A boutique unit in a well-maintained block near a beach will usually be more attractive to lenders than a 150-unit tower surrounded by ten others just like it. The location, outlook, and uniqueness of your apartment all matter—because banks are thinking about resale risk.
What You Can Do
If you're looking at a high-rise apartment, especially in a major city, speak with a broker who understands how each lender views these types of properties. Some banks flat-out decline them. Others have strict rules around deposit size or will reduce how much you can borrow.
Bottom line: Apartments can still be a great option, but be aware—what looks affordable and modern on paper might be a no-go for some lenders. Being prepared before you make an offer could save you a world of pain later.
