According to the latest Home Price Guide Housing Data report Sydney apartments are undervalued, when compared to other capital cities, and are forecast to rise nicely. http://www.homepriceguide.com.au/med...ies_DecQ07.pdf Must say that I tend to agree, especially in areas such as lower north shore, and yields are surprisingly rising, even more rapidly in some areas that anticipated. A recent example was for a client whom I secured a purchase for, with two rental appraisals @ $400 and $420 per week. He actually ended up getting $500 per week simply by replacing the carpet the day after settlement and giving the place a fresher look. Money well spent and increased the gross yield from 4% to just over 5%. I like the north shore area for units- the closer to the city and transport links, the better, in MHO. The better blocks are older, well maintained, and without costly items such as lifts and pools. Stick to streets that have appeal and are quiet for maximum value. You can still pick up 2bedders in some great suburbs for under $500K.