For years, many investors have worked from a simple rule of thumb: if you want stronger long term performance, you buy houses and avoid units. Recent results from Victoria suggest that story is no longer so straightforward. After a strong finish to 2025, units across much of the state have begun to outpace houses on price growth, and experts are tipping them as a surprise growth market for 2026.

This shift is not about short term hype. It reflects a deeper change in how buyers are balancing affordability, location and lifestyle in a market where borrowing capacity is still under pressure.

Why Victoria’s units are stepping into the spotlight

Medium density homes, including apartments, townhouses, flats and villas, are benefiting from a simple reality: in many parts of Melbourne and regional Victoria, they are still a more accessible way to get onto the property ladder. As house prices have pushed higher, particularly in well established suburbs, buyers who might once have stretched for a freestanding home are instead choosing a quality unit in a good location.

This is showing up most clearly in inner and middle ring areas where land is scarce but demand for amenity is strong. Here, established units are often larger than many people expect, with solid construction, generous floor plans and access to transport, schools and local centres. At the same time, there is a gradual structural shift in how comfortable people feel about apartment living as a long term choice rather than a temporary stepping stone.

The result is that competition for well located, realistically priced units has intensified, while listings remain comparatively tight. That combination is exactly what can push values higher and support steady rental demand.

How investors can approach the next phase of the unit cycle

For investors, the message is not that any unit in Victoria will perform well. The recent data underlines how selective you still need to be. In many suburbs, only certain pockets and specific styles of unit are likely to attract ongoing demand and meaningful growth.

A practical approach starts with revisiting the old “houses good, units bad” mindset. Instead of focusing on dwelling type alone, look at the relationship between price, income and lifestyle in each area. A larger, older style unit in a well connected suburb may offer better value than a small new build on the fringe, particularly for first home buyers who plan to stay put for longer and want to minimise the number of times they pay stamp duty over their lifetime.

From an investment perspective, key questions include:

• Is this suburb seeing consistent demand from owner occupiers as well as renters?
• Does the specific unit offer something that will remain attractive over time, such as space, light, parking or outdoor areas?
• ⁠How does the local pipeline of new medium density supply look, and is there a risk of oversaturation in the short term?

By working through these questions, you can separate the stronger long term prospects from stock that may simply be riding a short lived wave.

At Insight Property Wealth, we help investors interpret these shifts and decide where units deserve a place in their strategy. If you are considering Victoria and want to understand which parts of the unit market may offer a balance of affordability, yield and growth potential, we can guide you through the options.

Now is a good time to reassess your assumptions and make sure your portfolio reflects where the market is heading, not just where it has been.