The house vs. unit divide continues to grow

The difference between the price of units and houses continues to grow, with homes now costing $300,000 more.

According to CoreLogic, the “house premium” was just 16.7 per cent in March 2020, but has jumped to 45.2 per cent or $293,950. 

CoreLogic Research Director Tim Lawless said houses typically attract a premium, but the gap was widening.

“The house premium rose sharply through the pandemic upswing as more people sought out space and were more willing and able to live further afield in our cities,” Mr Lawless said.

“While we saw the premium contract through the early part of the rate hiking cycle as house values fell more than unit values, across the combined capitals the gap between house and unit values has since rebounded to a new record high as house values once again rise at a faster pace than units.”

According to Mr Lawless, since March 2020, capital city house values have increased 33.9 per cent or $239,000. 

At the same time unit values are up only 11.2 per cent or $65,235 during the same period of time.

Sydney has seen the largest increase in the house premium since the start of COVID, with the gap between house and unit values growing by almost 36 percentage points.

The Harbour City has the largest gap followed by Melbourne, Perth, Adelaide and Brisbane.

Meanwhile, Darwin’s house premium has fallen to 12.2 percentage points. 

“While Sydney tops the table again for largest 12-month change in premium followed by Canberra, several cities have seen the premium shrink back a little, including Brisbane and Adelaide,” Mr Lawless said.

“This could be reflective of homebuyers seeking out more affordable housing options, which has diverted more demand towards units.”

Mr Lawless said house prices are now out of reach for many including first home buyers and low-income earners. 

“With housing affordability remaining a key challenge across Australia, the substantially lower price points across the medium to high density sector are likely to become increasingly in demand as buyers become more willing to sacrifice space for proximity to essential amenities,” he said.

“Alongside lower prices, medium to high density housing options are often strategically located close to transport networks, major working nodes and high amenity precincts.”

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