Apartment investment returns tipped to outpace historic rates

Investment returns for apartments in Sydney, Melbourne and Perth are expected to outpace previous rates, according to new CBRE research. 

CBRE's Apartment Outlook 2H 2026 examines demand, supply, vacancy, prices and rents. 

CBRE's Head of Research, Pacific, Sameer Chopra notes apartment values are attractive, reflecting the recent impact of changes to negative gearing, capital gains tax, and high/near-peak interest rates.

"Investment returns for apartments in Sydney, Melbourne and Perth are likely to outpace historic rates while in other cities, including Adelaide, Canberra and the Gold Coast, investment returns are likely to be more modest relative to history," Mr Chopra said.

The report shows median apartment prices are expected to grow by 20% between 2026 and 2030, with the strongest growth in 2028 and 2029.

The report notes construction costs have outpaced apartment values by 30% over the past five years, which has impacted supply. 

Apartment supply is expected to average 54,800 per year over the next five years compared to 74,200 per year for the previous 10 yrs.

"Falling supply is also likely to see acceleration of rent growth. We expect median rents to grow by 26% between 2026-2031, across 53 precincts in Australian capital cities," Mr Chopra added.

"In line with this, we forecast that by 2031, 82% of 2-bed apartments are expected to have rents exceeding $800 per week with 39% exceeding $1000 per week."

Capital city vacancy is expected to fall further to 1.1% by 2031 from 1.8% in 2026. Vacancy will be around half of the previous decade's average of 2.5%.