The reality of just how out of reach the ‘Australian dream’ is has been laid bare in a new report that reveals the stark divide between apartment and house values.
In some of Australia’s ritziest suburbs, unit prices are a little over a fifth of house prices in the same neighbourhood, according to a new report by CoreLogic.
Perth’s Mosman Park takes the crown for having the greatest difference between unit and house prices: apartments in this area cost around $384,632, which is just 21.4 per cent of the median price of houses nearby at $1,797,852.
In second place is Sydney’s suburb of Strathfield, where the median unit price ($662,094) is just 23 per cent of the cost of houses at $2,876,380.
In Melbourne’s Stonnington, unit prices ($652,686) are a quarter (25.9 per cent) of house values in the same area, at $2,518,739.
Meanwhile, property buyers in Adelaide’s Walkerville will be forking out less than a third (30.6 per cent) for a unit compared to what they would pay for a house.
According to CoreLogic head of research Eliza Owen, housing affordability has worsened over the years, with unit values now making up a lower proportion of house values in nearly every Australian capital city compared to 2016.
“The analysis … could see the biggest challenge for apartment owners looking to upgrade to houses in the same area,” Owen said.
Other factors at play include the premium value of standalone houses in covetable locations, particularly suburbs near the CBD, she added.
Additionally, areas with higher supply of units meant the units were priced lower compared to houses in the same area, such as in the case of Strathfield, where 64.6 per cent of properties are units.
“Higher concentrations of unit supply have likely put downward pressure on growth in unit values over time,” she said.
Here’s a look at unit values as a proportion of house prices in every Australian capital city:
But it’s not all bad – the upside is that a higher supply of “relatively cheap” units provides opportunities for apartment hunters, and also increases socioeconomic diversity in areas closer to the CBD, Owens said.
However, looking at the bigger picture, buying a home is ultimately costing Aussies more than it used to.
“Looking at the change in unit values as a portion of housing over time, shows apartment owners in the current market would be able to put less towards a house than they could five years ago,” Owens said.
“This would be particularly frustrating for those looking to start families, or seeking more space.”
As house prices continue to soar, apartments will become popular again as affordability issues continue to pressure buyers, Owens said.
“Also, with investment activity picking up, interest in medium-to-high-density styles of housing could lift as investment demand has historically been skewed towards the unit sector.”