House and Unit Price Gap Reaches Record Levels

The difference between house and apartment prices is the widest on record as the argument for increased density grows stronger.

Capital city houses were 37.9 per cent, or $240,500, more expensive than units, according to Corelogic.

Sydney’s gap was the nation’s widest with houses $523,000 more expensive than apartments.

House values continued to outpace that of units in November with houses up 1.2 per cent and apartments at 0.7 per cent.

Although this continued October’s trend of a slimmer gap, the threat of Covid-varient Omicron stalling the resumption of international migration could stifle apartment price growth in Sydney and Melbourne.

But border closures aside, apartment prices have picked up markedly in the past few months as affordability constrains low-density housing.

Capital city apartment prices have increased 12.6 per cent in the past year, the strongest annual growth in 11 years, while houses have increased at the fastest pace in more than three decades, up 24.3 per cent.

Apartment and house prices in Australia

^{_{^Source: Corelogic, hedonic home index November 2021}}

Corelogic research director Tim Lawless said rent was also on the rise for units, further boosting the sector.

“With such a large value gap between the broad housing types, it’s no wonder we are seeing demand gradually transition towards higher density housing options simply because they are substantially more affordable than buying a house,” Lawless said.

Australian Bureau of Statistics data showed apartment approvals picked up at the start of the year before slowing down again as the entire market passed its peak.

However, long project lead times and a lack of international migration will hold the complete apartment market rebound off for now.

This year 9732 fewer apartments were expected to be completed than in 2020 and 19,698 fewer than when the market peaked in 2018, according to Urbis.

At this stage the supply for the next three years is forecast to be lower than this year’s.

The exception to this, in the national apartment market report, was in Brisbane and on the Gold Coast, which are being spurred on by domestic migration and the 2032 Olympics.