Buying a Unit vs a House in South East Melbourne, Your Options Explained
The unit-versus-house question trips up a lot of buyers in South East Melbourne, and usually for the wrong reason. Most people frame it as a lifestyle decision, when the lending decision often settles it first. What you can borrow, what deposit you need, and which schemes are actually available to you differ significantly depending on which property type you are targeting.
In this part of Melbourne, the gap between house and unit medians is one of the widest in the country. Cheltenham has a house median of $1,298,750 and a unit median of $700,000. Bentleigh sits at $1,755,000 for houses and $935,000 for units. That spread changes what is genuinely reachable, and it also changes your deposit, your LMI exposure and your scheme eligibility in ways that are worth understanding before you start inspecting.
Our team helps buyers across South East Melbourne work through exactly this kind of decision, comparing across 60+ lenders. The apartment home loan side of it is where most of the difference is made.
Key takeaways
- Every approved suburb's house median sits above the $950,000 scheme cap.
- 22 of 28 suburbs have a unit median under the cap, opening scheme access.
- Lenders assess units differently on size, density and title type.
Is a unit or a house the better buy in South East Melbourne right now?
For most buyers in South East Melbourne, a unit is the only realistic entry point, and the medians make that plain. CoreLogic data shows Moorabbin with a house median of $1,280,000 and a unit median of $770,000, while Cheltenham sits at $1,298,750 for houses and $700,000 for units. Even in the more affordable parts of the approved suburb set, no house median falls below $1.28 million.
That does not make units a compromise. In suburbs like St Kilda and Windsor, units at $512,000 and $530,000 respectively sit well under the $600,000 duty exemption threshold, which means a first home buyer pays no stamp duty at all on those purchases. A house in either suburb is not just above the scheme price cap, it is more than twice the cap.
Source: CoreLogic (via YIP, June 2026).
How do lenders assess units and houses differently?
The loan mechanics are broadly the same, but lenders apply extra scrutiny to units in three specific areas. Getting these right at the start saves a lot of time later.
Minimum size:
Most mainstream lenders require a minimum internal living area of around 50 square metres, excluding balconies and car spaces. Some lenders will go to 40 square metres in high-demand capital city areas, and a narrow panel reaches approximately 35 square metres. Below those thresholds the pool of willing lenders shrinks sharply, valuations become conservative, and resale is harder.
High-density postcodes:
Several South East Melbourne postcodes carry high-density flags with certain lenders, which can cap the LVR at 70% to 80% even where the borrower would otherwise qualify for 90% or more. This is entirely lender-specific and changes between lenders on the same panel, which is where having access to a wide panel matters most.
Title type:
Standard strata title is what most lenders prefer. Company title and leasehold title attract a narrower panel and sometimes a higher deposit requirement. If you are considering a company title unit, the financing conversation should happen before the inspection, not after.
We see buyers discover the size restriction after they're already emotionally attached to an apartment. The lender's valuer comes back and the deal falls over, not because the buyer couldn't afford it, but because the floor plan was 43 square metres. Checking the internal area before the first inspection is a two-minute step that saves weeks.
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What schemes and deposit routes are available for each property type?
This is where the unit-versus-house decision becomes a scheme-eligibility decision. The $950,000 price cap on the First Home Guarantee and the Family Home Guarantee applies to every approved suburb in South East Melbourne, and every house median in the approved set sits above that cap. That means first home buyers relying on those schemes are effectively restricted to units.
The options worth weighing:
- › First Home Guarantee (5% Deposit Scheme): 5% deposit · no LMI · $950,000 price cap · units eligible in 22 of 28 suburbs · no income cap
- › Family Home Guarantee (single parents): 2% deposit · no LMI · $950,000 cap · units eligible · no first home buyer requirement
- › Help to Buy (federal shared equity): 2% deposit · government takes up to 30% equity on an existing home · $950,000 cap · income caps apply ($103,000 single, $165,000 joint)
- › Standard loan with LMI: 5% to 10% deposit · LMI premium added · no price cap · both property types eligible
Victoria's First Home Owner Grant of $10,000 applies to new homes only, capped at $750,000. That makes it an off-the-plan unit story in South East Melbourne, not a houses story. The Victorian Homebuyer Fund is closed to new applicants, so Help to Buy is the only shared-equity pathway currently open.
Source: Housing Australia; State Revenue Office Victoria.
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What does it cost to buy each property type in South East Melbourne?
The deposit gap between a median unit and a median house in South East Melbourne is substantial. At Bentleigh, a 10% deposit on the median house of $1,755,000 is $175,500. A 10% deposit on the median unit of $935,000 is $93,500. That difference alone changes how long a buyer needs to save and whether LMI is part of the picture.
Stamp duty follows a similar pattern. A first home buyer purchasing a unit at $512,000 in St Kilda pays no duty at all under the Victorian exemption. The same buyer purchasing a unit at $700,000 in Cheltenham falls in the concession band between $600,000 and $750,000 and pays a reduced amount calculated on a sliding scale. Any purchase above $750,000, house or unit, attracts full duty. Every house median in the approved set sits above $750,000, so the duty concession is essentially unavailable to first home buyers purchasing houses here.
The off-the-plan temporary duty concession is worth flagging for unit buyers specifically. For contracts on strata apartments or townhouses entered before 21 April 2027, construction costs incurred after the contract date can be deducted from the dutiable value. This applies to investors and owner-occupiers alike and can meaningfully reduce the duty payable on a new unit purchase.
Source: State Revenue Office Victoria.
How long does a unit vs house purchase take, and what slows it down?
The settlement process for established houses and units in Victoria is broadly the same: a three business day cooling-off period after signing (not at auction), a Section 32 vendor statement required before you sign, and a deposit held in trust until settlement. The timing differences are not in the process, they are in the financing.
A unit purchase involving a size restriction, a high-density postcode flag or a company title adds lender assessment time. Some lenders will not lend on the property at all, which means the assessment has to start again with a different lender. That can add two to three weeks if the issue is discovered late. A house purchase in the same suburb generally has fewer lender-specific filters to pass, though a heritage overlay or a heritage-listed dwelling raises its own valuation and approval questions.
Off-the-plan unit purchases run on a different timeline entirely. Formal finance approval cannot be locked in for the whole build period, so a pre-approval lapses and finance is re-confirmed close to completion. Valuations are done on an as-if-complete basis, and if the market has moved between contract and completion, the valuation may come in below the contract price, requiring the buyer to cover the shortfall.
When does buying a unit not make sense?
A unit is not always the right call even where the price is lower. Buyers who plan to hold long-term and prioritise capital growth have historically seen stronger results from houses in the South East Melbourne suburbs, though past growth is not a guarantee of future performance and the broker's role is not to make that prediction.
A unit with a high owners corporation fee can affect borrowing capacity more than buyers expect, because lenders treat those fees as an ongoing commitment in the serviceability assessment. A $5,000 annual fee is roughly $415 a month that reduces what you can borrow, and fees in larger complexes with pools, gyms and concierge services can run well above that.
For buyers who may want to renovate significantly, a unit's owners corporation and building rules often restrict what is permitted. A standalone house gives more flexibility, which has genuine value for buyers who see the property as a project.
Where a buyer is weighing a unit with a $6,000 annual owners corporation fee, I'd usually run the serviceability number with that fee in it before we get too far down the track. It surprises people how much it moves. Sometimes it changes which property type actually works for their borrowing position, not just which one they prefer.
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
How to decide between a unit and a house in South East Melbourne, step by step
The decision involves four things you need to know before you inspect anything: your borrowing position, your scheme eligibility, the lender's rules on the specific property type, and the ongoing cost structure. Working through them in order means you inspect properties you can actually finance.
Step 1: Talk to us
We start by mapping your borrowing capacity across both property types, including what changes if an owners corporation fee is part of the picture.
Step 2: Confirm your scheme eligibility and deposit position
We check your eligibility for the First Home Guarantee, the Family Home Guarantee or Help to Buy against the $950,000 price cap, and identify which suburbs and property types are in reach at your deposit level.
Step 3: Match lenders to your target property type
We identify which lenders on our panel will assess the specific property you are considering, including any size, density or title restrictions, before you make an offer.
Step 4: Support you through to settlement
We manage the formal approval process, liaise with your conveyancer on timing, and work through any valuation issues before they become settlement problems.
What goes wrong when buyers compare units and houses in South East Melbourne?
Where buyers lose ground:
- › Applying to the wrong lender for the property type: a lender who does not cover the unit's size or postcode will decline the application, leaving a credit enquiry on the file. Checking lender policy before applying is the fix.
- › Assuming scheme access before checking the property price: buyers who target a house and plan to use the First Home Guarantee discover at the offer stage that the price cap has already been exceeded. Every house median in South East Melbourne sits above $950,000.
- › Ignoring the owners corporation fee in serviceability: the fee reduces borrowing capacity in the lender's assessment, and buyers comparing a $700,000 unit to a $1,300,000 house often overlook this before running the numbers on the unit.
- › Discovering the size restriction after exchange: the internal area of a unit is on the plan of subdivision. Checking it before inspection avoids falling in love with a property a lender will not finance.
Frequently Asked Questions
Can I use the First Home Guarantee to buy a house in South East Melbourne?
No. The First Home Guarantee price cap in South East Melbourne is $950,000, and every house median in the approved suburb set sits above that. The scheme works for units in this area, not houses.
Do lenders charge more for a unit loan compared to a house loan?
Not usually on rate, but the LVR cap may be lower for a unit in a high-density postcode, which means a larger deposit is required to avoid LMI. The lending cost difference shows up in the deposit, not the rate.
Does an owners corporation fee affect how much I can borrow?
Yes. Lenders count the owners corporation fee as an ongoing commitment in their serviceability assessment, which directly reduces your borrowing capacity. A higher annual fee has a larger effect.
Is it better to buy a unit or a house as an investment in South East Melbourne?
That depends on your entry price, holding costs and the lending structure, which is a conversation rather than a general answer. Note that from 1 July 2027, negative gearing on established residential property purchased after 12 May 2026 is restricted by law.
What is the minimum unit size lenders will accept in South East Melbourne?
Most mainstream lenders require around 50 square metres of internal living area, excluding balcony and car space. Some lenders accept 40 square metres in capital city areas, and a narrow panel goes lower. The threshold varies by lender.
Should I use a mortgage broker or go direct to a bank for a unit purchase?
A mortgage broker, every time. Unit lending has more lender-specific restrictions than house lending, and a broker can identify which lenders on their panel will actually finance your specific property before you apply, saving time and protecting your credit file.
Your Next Steps
Choosing between a unit and a house in South East Melbourne is not just a lifestyle call, it is a lending decision that changes your deposit requirement, your scheme eligibility and which lenders will actually finance the property. Getting the order right, financing clarity before inspections, protects your time and your credit file.
The right choice depends on your numbers, and that is a conversation worth having. Talk to the EverLend team or call 03 7036 3356, and we'll compare your options across 60+ lenders.
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External Resources
EverLend · South East Melbourne · Ever Lend Pty Ltd (ACN 625 080 515), authorised under Australian Credit Licence 517192 · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.
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