The price gap between houses and units in Australia’s capital cities is larger than ever before, according to current market data analysis by CoreLogic RP Data.
As at December 2014, the capital city median house price was almost 20% higher than the capital city median unit price, which in dollar value terms means that median house prices are $100,000 greater than unit prices.
The research shows the price gap is the largest in Sydney, with houses selling for $243,000 more, on average, than units. This is followed by Canberra, which recorded an average price difference of $172,000 and Melbourne, with an average price difference of $170,000. Darwin recorded the smallest price gap with houses only selling for $32,000 more, on average, than units.
Tim Lawless, CoreLogic RP Data research director, says this certainly goes some way in explaining why Australia is seeing record high dwelling commencements for units.
“In particular, there is a large volume of new unit stock being constructed in Sydney, Melbourne and Brisbane. Growing demand for unit stock, both from investors and owner occupiers and the sheer affordability difference between house and unit prices at least partly explains this growing level of demand,” he said.
However, the challenge now is to ensure that over-development doesn’t occur, says Lawless.
“… demand has increased for higher density housing stock but the level of apartment development currently taking place is unprecedented. It’s important to remember that units have typically been the domain of investors rather than owner occupiers,” he said.