Units are closing the gap on houses. Here is what is driving it
For most of the last decade houses pulled away from apartments. That gap has started to narrow, and the reasons say a lot about where buyers are heading.
RentBuy Team
3 min read
For years the story of Australian property was simple: houses went up faster than units. Land was the scarce thing, apartments were being built by the thousand, and the price gap between a house and a unit in the same suburb widened almost everywhere. Over the last eighteen months that story has started to change.
What the numbers show
Across the suburbs with the most activity on RentBuy, unit prices have grown faster than house prices in most of the last six months, and in several inner-city and middle-ring suburbs the gap between a two-bedroom unit and a three-bedroom house is the narrowest it has been in years. Units are also spending fewer days on market than they were a year ago, while houses have held steady.
Why it is happening
Affordability is the biggest factor. As house prices moved out of reach for many first home buyers and downsizers, the buyers did not leave the market; they moved to the next thing they could afford. A well-located apartment with a car space and a balcony is now the realistic first purchase for a large share of buyers under forty.
Supply is the second. Apartment construction slowed sharply after 2022 as building costs rose and projects were shelved, so the pipeline of new units coming to market has thinned. Fewer new completions means less competition for existing stock.
The third is a shift in what buyers want. Smaller households, more people working from home a couple of days a week and less appetite for a long commute have all made a good apartment near transport, cafes and parks more attractive than a bigger house further out.
What it means for buyers
If you are buying a unit, the easy gains from a discounted market are mostly behind you, but the fundamentals are better than they have been in a long time. Focus on the things that hold value: a well-run building with a healthy sinking fund, a floor plan that works, natural light, and a location that does not depend on the car.
If you are buying a house, competition from buyers who have been priced out is easing slightly, which is good news for negotiation in suburbs where units are the alternative.
What it means for sellers
Unit owners who have been waiting for a better market may find it has arrived, particularly for larger apartments in older, low-rise buildings that compete with houses for the same buyers. As always, check the sold results for your building and street before deciding when to list.
