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House and unit price gap hits record $300k in capital cities

The gap between capital city house and unit prices has never been wider, with detached homes now costing almost $300,000 more.

According to CoreLogic’s latest figures, the ‘house premium’, or the difference between median capital city house and unit values, was just 16.7 per cent in March 2020, but has now jumped to 45.2 per cent.

That equates to $293,950. 

CoreLogic Research Director Tim Lawless said houses had historically attracted a price premium over units and higher capital gain, but several factors had helped widen the gap. 

“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,” he 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.”

Since the onset of the pandemic to January this year, capital city house values have increased by 33.9 per cent or by $239,000. 

Unit values over the same period are up 11.2 per cent $65,235.

A similar trend has played out over the past 12 months with house values up 11 per cent ($93,552) while unit values are up a lesser 6.9 per cent ($41,789). 

Sydney has recorded the largest jump in the house premium since the pandemic, with the gap between house and unit values widening by almost 36 percentage points.

This has catapulted the Harbour City to the top of the premium leagues table, followed by Melbourne, Perth, Adelaide and Brisbane, which have all had their house premium grow between 15 and 16 percentage points over the same period.

At the opposite end of the spectrum, Darwin’s house premium has reduced 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.”

The top two suburbs with the highest house premium are among Sydney’s most expensive, with Bellevue Hill first, with a house premium of 525.7 per cent, while Vaucluse is second at 499.8 per cent. 

Strathfield and Mosman also make the list, as does Perth’s Mosman Park, with its house premium of 431.3 per cent.

Source: CoreLogic

Perth suburbs also take out the top three spot on the list of the smallest house premiums, with Nollamara topping the list, with a house premium of 5.8 per cent.

This is followed by Balga (6 per cent) and Westminster (10.9 per cent).

“The suburbs with the smallest differential in price between a house and unit may offer good buying opportunities for those able to stretch themselves to secure a piece of land without the hefty premium we’re seeing more broadly across many parts of our cities,” Mr Lawless said.

“With houses typically yielding a stronger capital gain outcome over time, these suburbs with a lower house premium could be strong investment opportunities.”

Source: CoreLogic

Mr Lawless said house prices had moved out of reach for an increasing number of people, especially 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. 

“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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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.