Where to prefer a unit over house,
The age-old debate continues: are houses truly a better investment than units?
Standard advice suggests always purchasing a house, if financially feasible, due to the intrinsic land value it holds.
However, this isn’t the case in every situation, as recent trends show shifts in buyer preferences.
Over the past year, unit price growth in Brisbane has outpaced that of houses significantly.
Additionally, Perth and Adelaide have demonstrated similar trends, as reported by new research from Nuestar and Hotspotting.
Michael Wilkins, founder of Nuestar, highlights that more buyers are increasingly opting for units instead of traditional housing stock.
This shift occurs particularly for those seeking units near the city center, which often feature more affordable price points.
“The growth in the unit sector of Brisbane has been remarkable, with the median unit price increasing by over 17 percent.”
Mr. Wilkins noted this surge occurred over the year leading up to July.
“In comparison, the Brisbane house prices have also seen an increase, rising by 13.4 percent during the same timeframe.”
Hotspotting director Terry Ryder pointed out that the unit markets in both Perth and Adelaide experienced significant growth recently.
“In Perth, the median unit price has soared by over 20 percent in the year leading to July,” he explained.
“Meanwhile, in Adelaide, the median unit price strengthened impressively by 12.4 percent over that same period,” he added.
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“These growth levels are only slightly below the housing performance in both cities, suggesting further price increases may be on the way.”
According to PropTrack, the median house price in Perth rose nearly 24 percent over the year leading to July.
Additionally, in Adelaide, the median house price increased by 15.5 percent during the same period.
Unit markets are also showing strong performance in Sydney, Mr. Wilkins emphasized.
“Sydney’s unit markets are thriving, while house markets are lagging behind,” he stated.
Furthermore, the market share of attached dwellings is continually rising, indicating a shift in buyer preferences.
“In most Greater Sydney municipalities, where sales activity is robust, it is primarily the unit markets that are most active.”
“Outer-ring house markets are generally subdued, indicating that those seeking affordable options are opting for apartments and townhouses instead.”
Mr. Ryder mentioned that the strength of the unit sector will likely stimulate more development activity in the future.
He specifically highlighted the potential for boutique apartment projects to gain traction among buyers and investors.
“It is anticipated that buyers and investors will focus more on boutique and medium-rise projects,” he explained.
These projects typically have construction times of less than two years, offering greater certainty for completion within a reasonable timeframe.
Spyre Group is one of the boutique residential developers actively pursuing unit projects in the current market.
In fact, they reported over $16 million in sales across their Brisbane and Melbourne markets in August alone.
“Data from CoreLogic indicates that Brisbane units are expected to increase in value by over 20 percent throughout 2024.”
The latest market update highlights that this growth in apartment values will likely push the median price above $700,000 by year-end.
This increase would surpass median prices in both Melbourne and Canberra, reflecting a significant market shift.
Moreover, a continued lack of supply, particularly in inner-city Brisbane, has consistently driven value increases throughout the year.
New research from Place Estate Agents reveals that Brisbane unit listings are currently tracking 43 percent below the five-year average.
This shortage indicates that there still isn’t enough stock to meet the ongoing buyer demand in the market.
Place Bulimba agent Tom Kralikas, who specializes in inner-city apartments, noted a growing trend among downsizers and ‘rightsizers.’
He explained that many are choosing units close to Brisbane’s CBD for their next move.
“The river city is emerging as the new hotspot for rightsizers,” Mr. Kralikas stated.
These buyers prefer purchasing in the CBD rather than traditional sea change destinations, seeking a different lifestyle.
The appeal lies in the city’s vibrant urban amenities and accessible attractions, making it an attractive option.
Recently, Mr. Kralikas sold a unit on Margaret Street for $2.3 million to a buyer relocating from Sunnybank.
“This buyer plans to downsize from a large house to a secure unit for easier travel and less maintenance,” he said.
“We had over 50 buyers visit that property, and almost all were rightsizers looking for a vibrant CBD lifestyle.”
