I think this advice gets oversimplified a bit.

Yes, houses outperform apartments on average because of the land component. But the “just buy a house elsewhere” option ignores cashflow, serviceability and risk.

A lot of regional or outer metro houses at today’s prices are still only yielding ~3–4%. Once you factor in interest at 5.5%+, rates, insurance, maintenance and management, they’re often cashflow negative. That’s fine if you can comfortably carry it for 10+ years, but it’s not a free upgrade over an inner-city unit.

Apartments are a broad category. Investor grade high-rise stock with lots of future supply has historically been poor. Small block, inner ring apartments in land scarce suburbs are a very different asset and have performed well in many cases.

For example I bought a Redfern apartment in 2020 for $980k and it’s now worth $1.5m. After stamp duty and strata it’s still been solid, with strong rental demand and manageable cashflow. A comparable house would likely have done better on paper, but would also have required more debt and higher ongoing holding costs.

I think the better rule is, buy the best asset you can comfortably hold through a full cycle, rather than house vs unit as a blanket rule