Sydney unit markets hold strong in 2022 as house prices fall

Some of Sydney’s most densely populated suburbs have held their value against falling house prices as buyer preferences start to shift.

High rise living fell out of favour during the pandemic.

Units in some of the most densely populated parts of Sydney have been tipped to outperform houses next year in a shift away from the pandemic preference for space and greenery.

Data from PropTrack shows unit prices in a number of inner city suburbs recorded slight growth or stayed steady despite prices falling across Sydney as a whole.

Stanmore, Chippendale, Petersham and Elizabeth Bay had growth of 3 to 8 per cent in the 12 months to December while Sydney and Ultimo held steady.

Demand is starting to grow for units in the inner city. Picture: Phoenix Naman.

PropTrack economist Angus Moore said, broadly speaking, units were holding up better than houses throughout the downturn.

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“That’s not just in Sydney – that’s true nationally,” he said.

He said there were two reasons to believe this trend would continue throughout the next 12-18 months.

House prices have fallen across Sydney this year. Picture: Julian Andrews.

The first was affordability.

“In an environment of higher interest rates, we might be seeing some buyers substitute back towards apartments and away from houses,” he said.

“We saw house prices grow significantly quicker than unit prices during the pandemic. So on a relative basis, units have never looked cheaper.”

The other reason was the rental crisis.

Not only could more renters decide to buy as the cost of renting skyrocketed, more investors could be attracted to the returns generated by surging rents.

PropTrack economist Angus Moore.

“Rental markets are really tight at the moment,” he said.

“We are seeing migration return and we know that recent migrants disproportionately live in inner city areas. That’s going to drive demand in inner city areas – we’re already seeing that.”

Despite units being expected to outperform houses, Mr Moore said price falls were still likely.

Founder of Ayre Real Estate Adrian Wilson said prestige apartments in the Sydney CBD had performed well in 2022 because of a shortage in penthouses and oversized dwellings.

331/3 Darling Island Rd, Pyrmont is for sale with a guide of $13.85m.

“Stock levels for prime property at the moment are extremely tight, this is largely due to the opening of borders and return to the office in Sydney’s CBD,” he said.

“Over the next 12 months to two years, we’re expecting the short supply trend to continue, mainly due to construction delays due to the Covid backlog on projects across the city.”

Some up market dwellings for sale include 331/3 Darling Island Road, Pyrmont which has an asking price of $13.85m after selling last year for $12m and 1301/71 Macquarie Street, Sydney, which is expected to fetch around $6.5m after selling last year for $5.2m.

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Originally published as Sydney unit markets hold strong in 2022 as house prices fall