According to Domain, the price differential between house and apartments has hit 66%, which is the widest gap on record.
This gap, in turn, is reportedly driving home buyers towards apartments:
Stuart Penklis, head of residential at developer Mirvac… says there’s now a discernible shift in owner-occupiers and families choosing apartments.
“Before, people aspired to live in a free-standing house but everything has changed in the past 12 months,” he says. “Affordability of houses has significantly diminished and high-quality, larger apartments have become a good-value proposition…
“In addition, people are increasingly looking for something that will give them a good lifestyle in connected and well-serviced communities that have a lot of amenity on the doorstep. We’ve seen this change happening across the country, and particularly on the eastern seaboard, and I think the advent of COVID accelerated the change, too.”
This report is more spin than substance. CoreLogic sales data shows near record high demand for houses, whereas demand for units is relatively depressed:
House sales are tracking around record highs.
Similar dynamics are also at play in the rental market, whereby house rents are growing far quicker than unit rents:
House rents are growing far stronger than unit rents.
Demand has also shifted away from capital cities towards regional areas, which is reflected in price and rental growth:
Regional price growth is far stronger than the capital cities.
Regional rental growth has been far stronger than the capital cities.
The reality is that demand has shifted strongly away from units towards houses, as well as from capital cities to the regions.
More Australians now value space over living in vertical slums. While some will end up choosing apartments, for most this will be because of necessity not choice.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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