Price Predictor Index Spring Edition: Units Thriving

Hotspotting

The new Spring edition of The Price Predictor Index provides emphatic confirmation of the most compelling trend in Australian real estate: the escalating demand for apartments and their challenge to houses on capital growth performance.

We have been speaking about the rise and rise of apartments for the past 18 months and there is a growing body of evidence which confirms that more and more buyers are opting for attached dwellings: units, apartments and townhouses.

Our analysis of sales activity data for the latest quarter for the Spring edition of The Price Predictor Index reveals that this trend is dominating markets across Australia.

For example, there is a stark contrast in the Sydney market. In simple terms, unit markets are pumping and house markets are not - and the market share of attached dwellings continues to rise.

In most of the Greater Sydney areas where sales activity is strong, it’s the unit markets that are most active. Outer ring house markets are generally subdued, suggesting that those seeking affordable options are choosing apartments and townhouses.

The dominance of attached dwellings in Sydney market performance can be seen in various metrics. While 45% of locations with house markets have positive (rising, recovery, consistent) rankings in this analysis, 67% of unit markets are positive.

This coincides with further evidence that a growing share of dwelling sales in the Greater Sydney market are attached dwellings. Comparing the June Quarter results for the past four years, the market-share of units was 48% in 2021, 50% in 202, 52% in 2023 and 54% in 2024. There’s a pretty clear pattern emerging there.

Sydney’s experience, with attached dwellings outperforming detached, is part of a strong national trend that is also evident in other cities and some of the regional jurisdictions.

In the Brisbane City LGA, elevated demand for units is driving overall activity. In Melbourne, which overall continues to under-achieve, a key exception is provided by inner-city unit markets. And Canberra is experiencing a similar scenario.

While just over half of Canberra markets overall have positive ratings, 78% of unit markets have rising, recovery or consistent classifications based on sales activity trends. Of the 36 unit markets in our Canberra analysis, only 3 have negative ratings.

While only 35% of house markets are classified as rising markets, 61% of unit markets in Canberra have this rating.

Affordability is likely a major driver of this trend. Canberra has a median house price close to $1 million (PropTrack data), higher than Melbourne and Brisbane. But its median unit price is $605,000, notably cheaper than Melbourne, Brisbane and Sydney, and on a par with Adelaide. The market share of units is rising year by year and attached dwellings now account for 44% of dwelling sales in Canberra, compared to 41% in 2021.

In booming Perth, the strongest markets in Perth now are well-located locations with a major presence of attached dwellings.

While the most popular house markets for home buyers and investors (mostly those at the affordable end of the market) are a little less buoyant than earlier in the Perth up-cycle, the focus is switching for affordable units.

Perth started this boom with a reputation as the most affordable capital city housing market. After a couple of years of stellar price growth, that’s no longer the case. Perth is now well above Hobart and Darwin with its median house price and challenging Adelaide.

Perth now has a median house price of around $800,000, but its median unit price is in the low $500,000s, still well below that of Hobart and Adelaide.

When the bargain suburbs have house medians above $500,000, the big attraction that caused the stampede starts to fade. So now buyers in Perth, increasingly, are looking at unit markets, which are less competitive than the house markets.

So now units are capturing a growing market-share in Perth, similar to the scenarios in Sydney, Melbourne, Brisbane and Canberra.

And units are out-performing.

In the new Spring edition of the Price Predictor Index, 29% of Perth house markets are3 classified as rising but almost 50% of unit markets are ranked as rising, based on trends with sales activity.

Clearing, the trend with more and more buyers opting for attached dwellings over detached houses, is gathering momentum.

It’s a major paradigm shift in Australian real estate – and at Hotspotting we believe this trend is here for the long term.