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News.com.au
a day ago
- Business
- News.com.au
Australia's property shift: Units now outperforming houses
Apartments are now outperforming houses in price growth across most of Australia's capital cities — but Melbourne buyers aren't convinced. A major new report from Hotspotting and Nuestar has flipped Australia's long-held property logic, revealing unit prices are now rising faster than house prices in the majority of capital city markets, driven by affordability pressures, soaring rents and shifting buyer psychology. The analysis shows 62.9 per cent of apartment markets in capital city council areas recorded equal or higher median price growth than houses in the year to May 2025. 'I'd be locked out': Mum's $65k home warning Brisbane led the charge, with 76.3 per cent of its apartment markets outperforming houses. Perth followed closely with 75 per cent, and Sydney wasn't far behind at 71.4 per cent. Hotspotting founder Terry Ryder said the old rule that houses on land always delivered superior capital gains no longer held true. 'The once-dominant paradigm is simply no longer the case,' Mr Ryder said. 'The demand for apartments is being driven by affordability, lifestyle preferences and higher rental yields. And that's showing up in the numbers.' Nuestar founder Michael Wilkins said buyers today were more value-conscious and lifestyle-focused than ever before, and quality apartment design was lifting performance. 'The quality of today's new apartments is worlds apart from the cookie-cutter blocks of 10 years ago,' Mr Wilkins said. 'Buyers want smart floorplans, integrated amenities and access to transport, and that's what's driving performance.' Across Australia, 154,928 apartments were sold over the past 12 months, a number experts expect will continue to grow into 2025. But in Melbourne, the apartment resurgence has failed to land. MR Advocacy director and buyers agent Madeleine Roberts said local demand remained heavily skewed toward houses and villa units, with the inner-city apartment market still burdened by longstanding stigma. 'We're definitely not seeing that trend in Melbourne,' Ms Roberts said. 'Apartments here, particularly in Docklands and the CBD, have underperformed for years. They just don't offer the same growth potential.' While lower prices appealed to some buyers, Ms Roberts said most were still opting to move further from the city in exchange for land. 'We've always been a city that values space,' she said. 'Apartments might be cheaper, but they're not seen as a stepping stone, more like a compromise.' The MR Advocacy director said her firm hadn't bought a single inner-Melbourne apartment on behalf of a client in recent months, instead steering buyers towards villa units and townhouses in Melbourne's middle-ring and outer suburbs. 'There are still good-quality apartments out there, but not all stock is equal,' Ms Roberts said. 'You've got to be careful. Some of these buildings come with high body corporate fees, low growth, and difficult resale.' Ms Roberts said rentvesting was emerging as a smarter strategy for younger buyers. 'Buy where the numbers work, rent where the lifestyle works,' she said. 'It's often cheaper to rent an apartment than to own one here, and you can still build equity elsewhere.' In Brisbane, the apartment surge is already well underway. McGrath Wynnum-Manly principal Gaby McEwan said the unit market had roared back to life, driven by downsizers, first-home buyers and investors. 'We've absorbed that oversupply of apartments we had back in 2014 to 2016,' Ms McEwan said. 'Now we're in a completely different market. There's real scarcity, and real demand.' Ms McEwan said buyers who had been priced out of detached houses were now turning to low-maintenance apartments and two-bedroom townhouses in lifestyle-rich suburbs. 'Two cousins I know recently bought a townhouse on Charlotte St in Wynnum for $710,000,' she said. 'They're rentvesting and know the value's only going up. That's the kind of mindset we're seeing.' The McGrath Wynnum-Manly director said luxury apartments were also in high demand from retirees, but a lack of downsizer-friendly stock and high entry prices were stalling many transitions. 'We've got retirees trying to simplify their lives and move into modern apartments,' Ms McEwan said. 'But some of these new builds start at $1.8m and go as high as $2.3m. In many cases, that's more than what their current house is worth.' She added that without stronger downsizer incentives, many older Australians were staying in large, ageing homes longer than they wanted to — or should. 'I've seen people in their 70s, 80s and even 90s still living in high-maintenance properties, some won't move until they have a fall and it's too late,' Ms McEwan said. 'There's a real housing gap here, and it's hurting the most vulnerable.'
Daily Telegraph
a day ago
- Business
- Daily Telegraph
Where you can buy a house for the price of a unit
Unit prices across Australia are swiftly converging with those of houses, with new data showing a significant narrowing of the price gap in major urban areas. Nuestar and Hotspotting analysis shows apartments now leading in price growth across several suburban areas, challenging the traditional dominance of houses across all states. Brisbane leads the charge with 76.3 per cent of its apartment markets showing stronger growth than houses over the year, while Perth follows closely behind, with 75 per cent of its apartment markets outperforming houses, driven by affordability and rising demand. Sydney's apartment market is also thriving, with 71.4 per cent of its apartment markets surpassing house price growth. Read more about your state here: > QLD: Units vs. houses: A tale of two cities > VIC: Melb suburbs where units save you $1m > SA: Where you can buy a house for a fraction more than a unit > NSW: Apartment price growth outpacing house markets Nuestar Founder and Director of Property Michael Wilkins said changing market conditions were challenging the old paradigms of real estate. 'The common view is that the real money is in land, not apartments. However, that's not our experience,' he said. 'With lifestyle benefits, lower costs, and outstanding locations, apartments are fast becoming the preferred choice for both homeowners and investors. 'Prices per square metre are continuing to rise, and developers are recognising that quality design, premium inclusions, and integrated amenity are increasingly the key to market appeal.' Supplementary data by Ray White shows the gap between houses and units was closing the fastest in Brisbane. The cost of a unit in Augustine Heights and Brookwater currently sits at $1,009,969 – just $12,975 shy of the $1,022,944 median house price. Wolffdene and Bahrs Scrub also had house-to-unit price ratios of under 5 per cent. In Darwin, Lyons is a suburb to watch with just $87,761 between houses and units, while Mandurah in had the smallest price ratio. In Melbourne, unit prices were quickly catching up to house prices in Doveton, Hampton Park – East, Yarra Valley and Frankston North. Seaford Rise and Moana in South Australia offered the smallest house-to-unit price ratios, while St Clair ranked in top spot for Sydney. Ray White chief economist Nerida Conisbee said the appeal of units was only set to grow, particularly as houses in blue-chip postcodes remained out of reach especially for first-home buyers. 'People have been priced out of houses in suburbs like Hawthorn for a long time, but units remain accessible,' Ms Conisbee said. 'It's a trade-off: do I want a big backyard, or am I happy with a smaller home in a better location?' MORE NEWS Shock salary you now need to buy a home Why luxury home dream could be out of reach for millions Great Aussie dream crushed by cost surge Ms Conisbee said Australia was undergoing a slow cultural shift, from suburban sprawl to inner-city density, but was still coming to terms with the change. 'We still love the idea of having a big house and a lot of land,' she said. 'The reality is household sizes are shrinking and it's much cheaper from an infrastructure perspective to increase density. 'That means more people will need to embrace apartment living, especially if they want to stay in high-demand suburbs.' Ms Conisbee said rising construction costs was helping to improve values for quality units. 'It's becoming harder and more expensive to build new apartments, which is why quality units in desirable locations are actually holding their value, or even outperforming.' Supplementary research by Nuestar and Hotspotting found 62.9 per cent of apartment markets recorded higher or equal median price growth compared to houses over the 12 months to May, 2025.
