New research from CoreLogic has revealed that the onset of the pandemic has seen a high demand for detached houses as reflected in price changes of houses and units.
In the past 16 months, capital city house values rose 14.2 percent. This is more than double the 5.6 percent rise in capital city unit values over the same period.
As of June 2021, the median capital city house value was $797,287, compared to a median unit value of $611,117. This marks a 30.5 percent gap between median house and unit prices, which is the highest on record.
Sydney houses and units currently have a record high price gap of 54.2 percent. The difference in median house and unit values has skyrocketed since September 2020, as the housing market saw a recovery trend following eased social distancing restrictions across the city.
Unit values continued to fall through to January 2021, as low levels of investor participation, and subdued rental conditions saw less interest in unit stock.
“As the Sydney lockdown reinforces the lasting impacts of Covid on large cities, and monetary policy remains accommodative, Sydney-siders who can afford it may still be willing to fork out a premium for detached housing in the months ahead,” said Eliza Owen, CoreLogic’s head of Australian research.
Melbourne has also seen a record high in the difference between house and unit medians which stood at 52.4 percent as of June. Melbourne has also seen the weakest rental market performance since the onset of Covid, and as a large portion of rental stock are units, this has dampened demand across the segment.
Owen said this also likely explains some of the weakness in the Sydney unit market, where rental demand was similarly affected by a lack of overseas migration.
Unlike Sydney, however, Melbourne has seen similar rates of disparity through the 2017 and 2018 calendar years when the house price premium on units averaged 46.3 percent. “A prolonged period of high unit supply, and development of high-density stock, kept unit values relatively low through this period,” Owen added.
“This dynamic may shift through the remainder of 2021 as data from the government statistician points to a fall in construction of units, and a rise in the construction of new houses.”
Other capital cities
As for the other capital cities, Canberra currently has the widest house and unit price gap of all capital cities, at 74.8 percent.
Perth currently has the second-lowest house premium of the capital city markets at 38.9 percent behind Hobart at 32.3 percent.
In Darwin house and unit prices across the region have risen by 24.3 percent and 22.5 percent respectively.
House prices in Adelaide have increased 16.2 percent compared with a 7.3 percent rise in units.
Since the onset of Covid, house values across Brisbane have increased 15.5 percent compared to just five percent across units.