Apartment price gains beating out houses in recent market recovery

The recent recovery of property prices is being led by gains in the unit market as buyers, who can now borrow less cash, are returning to the city in a reversal of pandemic boomtime trends.

Apartment price gains outpaced houses through the first half of the year. Picture: NCA NewsWire/Joel Carrett

Apartment prices are rising at a faster rate than houses in a complete reversal of pandemic boomtime trends.

After six months of sustained gains in the residential property market despite interest rate rises due to the low number of homes available, demand for apartments has surged as people seek cheaper homes closer to the city centres.

New data from housing researcher PropTrack for The Weekend Australian has shown the national cost of units has climbed 2.7 per cent through the first half of 2023, compared to lower 2.2 per cent for houses.

PropTrack senior economist Angus Moore said the relative affordability being found at the lower end of the market is becoming more appealing as the amount buyers can borrow reduced dramatically over the past year.

“A key trend we saw across the pandemic was a desire from buyers for larger homes, meaning that prices for detached houses grew substantially faster.”

“Since interest rates started rising, we haven’t seen that same degree of outperformance, and units have actually held up slightly better. Overall, unit prices are now only very slightly below their March 2022 peak, while prices for detached houses are still down a little over 2 per cent.”

“Part of the story for why units held up a bit better in the face of higher interest rates is down to their relative affordability.”