Australian families embracing long-term apartment living as house prices outstrip units by 100 per cent in some cities

Across Australia’s capital cities, the price gap between house and unit median prices has widened tremendously, with some cities experiencing a 100 per cent price difference.

Domain’s House Price Report found that Perth and Sydney have the most significant gaps, with the median house prices about double the median unit price, 91.7 per cent and 100.4 per cent, respectively. Hobart has the smallest price gap between property types, with a 31.9 per cent difference.

Domain chief of research and economics Dr Nicola Powell said a price gap between houses and units was normal, but not to this extent. 

“Before the pandemic, there was this natural balance between house and unit prices, and generally speaking, you saw house prices at about 40-50 per cent higher than a unit price,” she said.

“When you look at the price gaps now, what that suggests is two things: one, that houses are overvalued, or two, that units are undervalued. I think when you look at those price gaps, it really showcases the distortion in the sub-markets of the housing market that we’ve seen since the pandemic.”

“Perth is almost double the price of a unit, and Sydney is double the price of a unit – that is an extreme difference in price.”

SOLD - $1,075,000

10/67 Warrangarree Drive, Woronora Heights NSW 2233

3

2

2

View property

Real estate agent Ben Pike of Pulse Property Agents said it was likely the price gap would continue to widen as the demand for housing is higher than apartments, which reflects the inspection numbers he has been seeing.

“An apartment viewing averages 11 groups in an open home; the houses are 30 plus,” he said. “[For] my generation – I’m in my mid-30s – the demand, the intent, everyone’s goal is to get into a house. The energy [for owning a detached house] in the market is getting stronger and stronger.” 

Social impacts of the widening gap

As house prices become more unaffordable for everyday Australians, Powell said it had impacted how people saw the ideal long-term home.

“As Australians, we need to talk about our first homes in a different light,” she said. “We need to re-evaluate how our first home looks. That dream picture of a detached house on a block of land has changed over time as our population has swollen and our cities have grown.”

According to University of New South Wales research associate Dr Sophie-May Kerr, more people were embracing apartment living as a long-term lifestyle instead of using it as a temporary stepping stone to detached houses.

SOLD - Price Withheld

485 Adelaide Street, Brisbane City QLD 4000

3

2

1

View property

Kerr said one in five apartment dwellers were families with children, as the social norms of the ideal type of property to live in change.

“There are a range of things going on, so for other people, apartment living is a result of a combination of affordability pressures but also lifestyle factors, so things like wanting to prioritise living close to work or transport routes or amenities within the city,” she said. 

“With the increase of issues that we are seeing with housing affordability and the shift towards more higher density housing in our cities – we see that trend increasing and more likely to continue.”

In her research, Kerr found that 50 per cent of apartment dwellers in the western Sydney suburb of Liverpool were families. It found that the birth of a child did not generally trigger the switch to a house, but instead a larger apartment near the town centre because of the centralised benefits offered by urban locations.

“Those benefits of being able to live in a particular location within close proximity to work, transport routes and amenities within the city, they can be elements that can really be really valued by people.”

$873,000 to $918,000

26 Elizabeth Street, Liverpool NSW 2170

3

2

2

View property

Ray White Group chief economist Nerida Conisbee said there was a misconception that buying a house was better than an apartment in terms of value, but it was not that black and white.

“If you buy an apartment in Mosman [a northern Sydney suburb] and your alternative was to buy a house in Liverpool, the apartment in Mosman would have done better [in the long term],” she said.

Apartment living isn’t new; higher-density cities like New York City and Tokyo are known for their populations gravitating towards and embracing apartment lifestyles.

Contact Agent

2/814-816 Military Road, Mosman NSW 2088

3

2

2

View property

However, Kerr said many Australian apartments were not designed for long-term residents or families because society still saw units as a stepping stone rather than a long-term option.

“Our apartments largely reflect an investor product rather than delivering the types of homes that consumers can see themselves living in over the longer term,” she said. 

One key issue faced by current apartments is their design. Kerr said that since they were still developed as pre-detached house spaces and not for families, they lack adequate storage, communal spaces, and apartments with more than two bedrooms. 

“We do really need to be having that conversation, with policy setting and developers and the development industry, as to how we can work towards designing apartments in a way that they are seen as long-term homes and attractive to a wide variety of residents.”