Houses extend their value lead over apartments

Recently, Domain claimed that the price differential between house and apartments had hit 66%, which is the widest gap on record.

New data released from CoreLogic’s Tim lawless via Twitter confirms this view, also claiming “the ‘value gap’ between house and unit values [is] the widest on record”, which “could see affordability pressures gradually divert more demand back into the medium to high density sector”.

“Sydney is a good example, but the gap has widened substantially across every capital city”:

Gap between house and unit values

The price premium between houses and apartments has never been greater.

CoreLogic sales data shows near record high demand for houses, whereas demand for units is relatively depressed:

Australian property sales

House sales are tracking around record highs, whereas unit sales are tracking at the long-term average.

Similar dynamics are also at play in the rental market, where house rents are growing far quicker than unit rents:

Rental growth by capital

Rental growth has been far stronger across the detached house market.

The biggest divergence in rents between houses and units has taken place in Melbourne and Sydney, which have been hit hardest by the collapse in immigration (including international students).

More Australians now value space over living in vertical slums. While some will end up settling for apartments for affordability reasons, for most this will be because of necessity not choice.

Unconventional Economist
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