Houses still in high demand, apartment prices lagging behind
Apartment price growth continues to lag house price spikes in many Sydney and Melbourne suburbs, with the trend showing little sign of slowing.
The growing price gap between houses and units is a long-term trend driven by land scarcity in our largest cities, with the difference tending to be greatest between houses and apartment buildings.
While house prices in Sydney‘s North Ryde soared 29% in the year to March 31, house prices in the suburbs rose just 6%. Similarly, prices at Homebush rose 29%, compared to unit price growth of only 7%.
In Sydney’s Pennant Hills, house prices rose 24%, while unit prices remained stable, according to figures from CoreLogic.
It’s the same story in many parts of Melbourne, with house prices in Essendon North rising by 19% over the same period, while apartment prices have fallen by almost 1%.
Homes from Canterbury to Melbourne saw their prices jump by more than 14%, while units fell by 4%. In downtown Hawthorn East, homes rose 9.6%, against a 6% drop in unit prices.
Earlier analysis by CoreLogic showed that the most expensive real estate markets, particularly those near CBDs and in areas with a high number of units to houses, tend to have the most price differentials. important.
Eliza Owen, head of research at CoreLogic, explains that one of the reasons for the recent relative weak performance of unit market prices is COVID-19 related travel restrictions, including the closure of Australia’s international borders. .
The demand for investment units in urbanized centers has likely declined due to their high exposure to migrants and international students.