Sell with Confidence
Read More
News

Units don’t always see less price growth than houses

By Luke O'Kelly

Standard investment advice is to always buy a house instead of an apartment if you can afford to do so. The primary reason being that house price growth always exceeds unit price growth over the long term. While this is often the case, it doesn’t always hold true. For example, an apartment in one suburb may outperform a house in another. Less common however is unit price growth within a suburb outperforming houses in the same suburb.

Over the past 12 months, unit price growth in Brisbane and Adelaide have exceeded house price growth. Part of the reason for this is a combination of underbuilding and population growth. Whereas Sydney and Melbourne went into the pandemic with a strong pipeline of new development, this wasn’t the case elsewhere. Brisbane specifically has seen very strong population growth since then. Adelaide has also seen similar growth.

The result in regional South Australia is also interesting. Units include anything that isn’t a freestanding house. Both townhouses and apartments have done well in regional South Australia off the back of strong economic conditions. Over the past two years, South Australia has been the strongest growth state – agriculture has been a strong performer but also the state’s mining sector has done well, in particular copper mining.

In total, there were 294 suburbs where unit price growth exceeded house price growth. Sydney, Brisbane and Melbourne dominate, partly because they are the biggest cities. However, it is also likely that a larger number of high quality apartments being developed is lifting the median.

The suburbs with the biggest gaps in house and unit price growth are relatively diverse geographically and relatively expensive. The impact of the development of better quality apartments becomes more apparent at this level. Ivanhoe, for example, in Melbourne’s north-east is an expensive suburb that has seen a lot of new apartments built over recent years. The apartments being built are bigger and higher quality than the older style apartments that existed.

Nerida Conisbee
Ray White Group
Chief Economist

Up to Date

Latest News

  • It’s a different sort of downturn

    Nerida Conisbee, Ray White Chief Economist House price growth is definitely slowing. However, conditions in the final quarter of 2024 are continuing to show a two speed housing market. And like any change in market conditions, at a city level, they have very different drivers. There are two distinct markets … Read more

    Read Full Post

  • Generation shift

    Nerida Conisbee Ray White Group Chief Economist What leads to some suburbs being more popular with younger buyers than others? Suburbs have a pretty standard timeline. New homes are built, young families move in, those families age. Then the next generation moves in. But not all established areas experience the … Read more

    Read Full Post