Surging house prices across the country have left many prospective buyers, feeling as though homeownership is more unattainable than ever. These feelings are certainly substantiated by recent figures released by Corelogic. According to the Home Value Index released in early April, the national home value index recorded a 2.8% rise in March, the fastest rate of appreciation in 32 years.
The high demand, coupled with a limited supply of house and land has produced chaotic scenes at new land estate releases and auctions, particularly in Sydney and Melbourne, with many hopeful homebuyers missing out. Fierce competition at auctions has also seen buyers paying prices well over reserve for houses, which in some cases, require thousands of dollars extra in renovation costs to be brought up to livable standards.
'Fixer-uppers' are great if you have the time and the extra funds to put into them.
The meteoric rise in house prices, however, has not been matched by the unit sector. According to recent figures released by Domain, the median unit price now sits 66% lower than the median house price - the largest gap recorded since Domain figures began (source). CoreLogic's recent data shows that while Australia's median house price jumped 7.4 percent (to $643,203) in the year to March 31, unit prices jumped just 2.3 percent (to $547,543). Australia’s two largest capital cities have seen the smallest median price rises in units, well below the rest of the country. In Sydney, the median unit value rose by just 0.2 per cent (to $755,360), while Melbourne's lifted 0.9 per cent (to $593,121).
While property investors have been hit hard by low occupancy rates and stagnant unit prices caused by COVID, the situation has presented an opportunity to homebuyers otherwise priced out of homeownership. This trend toward apartment living for owner-occupiers has not gone unnoticed by developers such as Deicorp (The Anders and The Siding) in Sydney and Blue Earth Group in Melbourne, who are striving to create higher quality, larger, well-designed units appealing to this growing owner-occupier market.
These larger, high-quality units with first-class amenities have become a good-value alternative and it’s easy to see the appeal for busy families and empty-nesters alike. The ‘shared economy’ value of unit complexes provide all the benefits of a home with amenities like pools, gyms, and gardens, without having to spend the time maintaining them. The relative affordability of units in Sydney and Melbourne is currently allowing people to buy in ‘highly desirable’ areas close to shops, schools, health services, and good existing infrastructure, where house prices are otherwise out of reach to the average buyer.
'The Siding' by Deicorp in Petersham, Sydney
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