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By Joseph Ballota

The price gap between houses and units is growing: Here’s why

The unprecedented property boom of 2021 saw the price gap between Australia’s houses and units tighten to just 9.6%, but now the tide is shifting, and that price gap is widening once again.

In September 2021, the national median house price was $570,000, 9.6% higher than the median unit price of $520,000, REA explains.

But fast forward to May 2023, and the typical house costs $725,000, which is 30% higher than the price of a typical unit.

Price Gap

So, why is the price gap between houses and units widening?

Obviously, it’s because house prices are growing faster than unit prices, particularly in our capital cities.

The median house price is 31.6% higher than five years ago, but units have only increased a much more modest 9.8% over that same period.

Why are house prices growing faster?

A large driver of the increase was the Covid-19 pandemic.

You see, after years of house sizes shrinking, and of Aussies favouring low-maintenance homes with petite yards, and smaller footprints, the pandemic, and lockdowns saw a turnaround in what people wanted from their homes.

Instead, larger living spaces, outside spaces, and extra room to work from home have become a priority and it has driven up competition, and therefore prices, for houses.

Also, record-low interest rates amid the pandemic era made borrowing more money cheaper so people who in the past may have only been able to afford a unit were then able to compete for houses, further pushing up prices.

At the same time, government incentives, such as the HomeBuilder scheme, were primarily targeted toward houses, incentivising housing construction and renovations over those for units.

Another factor that impacts the price of houses, more than units, is the availability of land, particularly in inner-city suburbs.

As land is a limited resource, especially in desirable areas such as Sydney, its scarcity contributes to higher house prices.

And the scarcity of land and the ongoing desirability of space suggests the gap between the price of houses and units is likely to keep increasing.


The cities and regional areas where the price gap has widened most

REA and PropTrack data shows that, unsurprisingly, Sydney has the largest median house and unit price gap across the nation - at 74.5%.

And that’s a huge increase, from only 29.1% prior to the pandemic.

​​Sydney’s inner-city unit market suffered from the initial lockdown, driving down unit prices.

At the same time, the increased demand for houses, particularly in blue-chip areas, sent prices skyrocketing.

The ACT has the second-highest price gap, at around 62.3%, however, the capital has historically had a large price gap between its houses and units anyway, sitting at around 50% pre-pandemic.

At the bottom of the chart, the price gap between houses and unit prices in Hobart has mostly held steady over the past 5 years, mostly due to the state’s housing shortage driving median prices up for all types of property.

Five years ago, there was a 27% difference between Hobart’s two medians; now, it’s slightly higher at 30%.


When it comes to regional areas, regional Victoria and regional Western Australia come out on top with the highest gap between their house and unit prices, at 41.69% and 39.68% respectively.

These are driven by the high demand for houses outside of the city.

In contrast, demand for both houses and units in regional Queensland has reduced the gap between the median prices to just 3.77%.


Remember the investment rule

When it comes to property investment, lower house or unit prices alone aren’t enough alone to warrant a good investment opportunity.

‘Cheap’ property will always be ‘cheap’ so don’t get lured into thinking you’re getting a bargain.

It is likely that house prices will continue to grow more than apartment prices over the next couple of years, however, well-located townhouses which have their own significant land component will make excellent investment properties and are currently in strong demand by many first-home buyers who are being priced out of the housing market.

Moving forward townhouses, villa units, and family-friendly apartments will be great investments over the next decade, especially considering their current affordable entry price compared to houses.

And with soaring construction costs it is likely that all new apartment projects will cost 25%-30% more than currently completed projects and this cause the value of established apartments to rise as well.

My advice to investors is to avoid:

  • Packed high-rise apartment towers
  • Locations right in the thick of the CBD – they’re over-supplied and have low growth drivers.
  • Highly-featured complexes with lots of shared spaces that are expensive to maintain, like lifts, pools, and gyms

Instead, I suggest you look for larger apartments and units in middle-ring suburbs, which are close to good schools, parks, and cafes.

Throw in some good public transport links, and you’ve got the ideal investment for the Australian family of the future.

About Joseph Ballota Joseph is a Property Coach who put hundreds of people on the road towards wiping away their mortgage in under 5 years through expert Property Investment Plans.
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