As house price growth continues to outpace unit price rises, it could be the perfect time to downsize, with those selling their houses getting more bang for their buck and apartment buyers getting access to possible bargains.
As the influence of the COVID pandemic continues to be felt in the Melbourne property market, the median house price is now 64 per cent higher than the median unit price, compared to an average of 52 per cent over the last 10 years.
But that price disparity is unlikely to last as housing prices play catch up after the fall from the record peak of mid-late 2017.
According to the Commonwealth Bank, unit price growth could soon be greater than that of house price growth, with Australia’s biggest lender predicting house values to rise by six per cent in 2022, with unit prices tipped to pick up by nine per cent.
On the whole, CBA head of economics Gareth Aird expects Melbourne home prices to increase by around seven per cent this year.
House hunters and investors are both finding appeal in houses and in land currently, due to the incredible take up of the Home Builder stimulus and renovation opportunities due to low interest rates and pandemic trends such as the increased desire for a home office.
“It’s becoming really hard to get your hands on anything with three or more bedrooms,” Real Estate Buyers Agents Association of Australia president Cate Bakos said.
“Property investors are seeing the potential of manufacturing capital growth in the current market with almost a quarter of respondents looking for a property with renovation potential.”
However the discrepancy between house and unit price growth might not last as bargain hunters look to more affordable stock, investors shift to the unit market as our economic recovery continues along with a rise in demand for rental properties. And in the longer term, immigration levels return closer to pre-pandemic quotas.
Respected property data provider CoreLogic’s research director Tim Lawless said the discrepancy between home and unit prices could be a trend that won’t last.
“A housing market trend that has persisted through the COVID period to-date is the weaker performance of unit markets relative to detached housing,” he said.
“Across CoreLogic’s combined capitals index, house values (+4.4% over the past three months) have recorded a growth rate more than three times higher than that of its unit counterparts (+1.4%).
“There are some tentative signs this trend could become less obvious, with Sydney unit values recording their first month of growth since April last year and Melbourne unit values recording their largest gain since late 2019.”
Unit prices were performing well prior to the pandemic. According to CoreLogic, Melbourne unit prices fell 0.4 per cent over the last 12 months with house prices falling 1.8 per cent over the same period.
If you are considering downsizing and would like to take advantage of the gap growth between home prices and unit prices, get in contact with Brad Teal today.