After suffering a challenging 2020, including a number of lockdowns, the Melbourne property market is on fire.
And it is well documented that the price gap between Melbourne houses and units has widened over the last couple of years.
While family-friendly apartments in smaller low-rise blocks are still popular, the closure of our international borders and restricted traveling has meant there is little demand for apartments in the many high-rise apartment towers that litter Melbourne's skyline.
The latest Domain House Price Report shows that Melbourne’s median house price – which hit a record high of $936,073 in the December quarter – is now 64 per cent higher than the unit median of $569,677, which also reached a new high in December.
The report shows that, not surprisingly, the price gap between houses and units is far greater in some of Melbourne’s most affluent suburbs.
Prior to the pandemic, unit prices were growing at a faster rate than houses, with 12.2 per cent growth over 2019, compared to 8.7 per cent for houses.
However, last year Melbourne houses outperformed units, with house prices growing by 3.9 per cent in 2020, compared to apartments, which grew by 2.5 per cent.
In the last three months of last year, house prices increased by 5.3 per cent, compared to 4.4 per cent for units.
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There is a wide variety of apartments from the poor quality investment stock packed into the many new medium and high-density buildings to family-friendly apartments with courtyards or large useable balconies in desirable lifestyle neighbourhoods.
Moving forward, it is likely that house prices will 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.
Sure the markets are moving on, but not all properties are going to increase in value. Now, more than ever, correct property selection will be critical.
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