Price growth to push buyers towards units

The growing price gap between houses and units may push more buyers to opt for units, a senior RP Data analyst has said.

Based on median prices, houses across the capital cities are now 16.5 per cent more expensive than units, a record high price gap, statistics from RP Data showed.

“If we look at the median selling prices for houses and units across all capital cities over the final quarter of 2013, unit prices were around $95,000 lower than median house prices,” senior research analyst Cameron Kusher said.

He said this price differential may encourage more buyers to consider units over houses, particularly in expensive markets such as Sydney or Melbourne.

In Sydney, houses were 28.1 per cent more expensive than units, while the price gap in Melbourne was 23 per cent.By comparison, the price gaps in Perth and Brisbane amounted to 18.3 per cent and 18.5 per cent respectively.

Mr Kusher said units typically enjoy stronger rental demand and superior rental yields to houses.

“All of these benefits are, in most cases, afforded at much lower prices than houses within the same local area,” he said.

Houses across the capital cities grew by 9.9 per cent in 2013, compared to a nine per cent increase in unit values.

Nonetheless, the five-year average growth rate was almost identical, sitting at 4.8 per cent for houses and 4.7 per cent for units, Mr Kusher said.

The supply of units is also increasing in capital cities, accounting for 50 per cent of all dwelling approvals in Melbourne and Brisbane, and 60 per cent of approvals in Sydney, Darwin and Canberra.