Unit Performers
One of the key national trends we’re tracking at Hotspotting is the rise of apartments to challenge the dominance of houses as the dwelling of choice by most buyers.
Throughout 2023 we saw growing evidence of rising demand by a range of different buyer cohorts for affordable apartments in good locations.
This has led us to rank the inner-city precincts of Melbourne, Brisbane and Sydney among the leading hotspot markets in the nation.
The more we do our research, the more we find examples of locations where apartments are out-performing houses.
Not everywhere in Australia is producing these results but a rising number of suburbs ARE.
In the coastal market of Evans Head in regional NSW, the median price for houses has fallen 15% in the past year, but the median price for apartments has risen 14%.
The long-term capital growth average for houses in Evans Head is a healthy 9.5% per year over 10 years, but the growth average for apartments is considerably stronger, at 12.2% per year.
In the Wollongong suburb of Fairy Meadow, there were 46 house sales and 64 unit sales in the past year, with the median price for houses dropping 12% but the median price for units rising 16%. And of course units, with a median price in the $600,000s, are considerably more affordable than houses, with a median price above $1 million.
In iconic Byron Bay, prices overshot reasonable market levels during the Covid boom and have come back considerably since then.
The median house price dropped 25% in the past 12 months, down to $2.34 million. The median price for apartments also dropped, but down only 10% to $1.3 million, and there was a 2% increase in the latest quarter.
The long-term capital growth averages also show apartments performing better, averaging 10% growth per year, while houses have averaged 7% per year.
In another icon, Surfers Paradise, apartments are selling twice as fast as houses – and the median price for houses has dropped 5% in the past year but the median for apartments has increased 13%.
The long-term capital growth averages are a healthy 8.3% per year for houses and an even stronger 10.2% per year for apartments. And the rental yields are 2.8% for houses and 5.4% for apartments.
Price, once again, is a key factor – with median prices of $1.76 million for houses and $600,000 for apartments. Right now, apartments are typically selling in 28 days, with almost 1,500 unit sales in the past year.
At Coolum Beach on the Sunshine Coast in Queensland, both houses and apartments have excellent long-term growth averages, but apartments are better – 14.4% per year versus 13.1% per year.
Right now apartments are selling twice as fast as houses in that suburbs – 27 days for units and 54 days for houses, with relative affordability a key factor. The median prices are $1.3 million for houses and $780,000 for apartments, keeping in mind that many well-located apartments in this location have spectacular beach and ocean views.
Apartments are increasingly popular in Canberra, where the median price for houses is close to $1 million but the median for units is $590,000.
In the suburb of Chifley, the median price for houses dropped 12% in the past year to $1.06 million, while the median price for units rose 25% to $530,000, with relative affordability a driving factor.
The long-term capital growth averages are 7.1% per year for houses, and 11.7% per year for units.
Units currently are selling faster than houses in Chifley and the yields are better – 4.5% versus 3.6%.
In the Canberra suburb of Casey, houses are taking an average of 52 days to sell, but units only 34 days. The median price for houses has dropped 7% in the past year, while the unit median has risen 3%.
The long-term growth averages are 6.4% a year for houses and 8.6% a year for units.
And units have higher rental yields – 5.3% versus 4.1%.
There are many, many more similar examples to be found across the nation – providing growing evidence that one of the dominant paradigms in real estate (that houses do better than apartments) is being challenged.
