Pricing gaps across product types and capital cities
are widening
The cost of Sydney housing relative to other capital
cities is widening and the cost of buying a house as opposed to a unit is
increasing as a record number of units commence construction.
The cost of Sydney housing relative to other capital
cities is widening and the cost of buying a house as opposed to a unit is
increasing as a record number of units commence construction.
According to median selling prices over the three
months to December 2014 published in the CoreLogic RP Data Home Value Index
report, the gap between capital city house and unit prices has never been
greater. As at December 2014, the capital city median house price was almost
20% higher than the capital city median house price. In dollar value terms,
median house prices are $100,000 greater than unit prices.
Median prices are good for measuring relativity of
pricing between markets and to demonstrate the typical price that homes are
selling for over a specific period. Because a median price can be substantially
biased by different buyer segments that are active or inactive in the market,
the median price isn’t a reliable indicator for measuring the rate of capital
gain over time
Sydney has the largest differential between median
house and unit prices across the capital cities at $243,000. Melbourne
($170,000), Brisbane ($102,000), Perth ($110,000) and Canberra ($172,000) each
also have a difference between house and unit prices in excess of $100,000.
Across the remaining capital cities, the gap between house and unit prices are
recorded at: $87,800 in Adelaide, $80,000 in Hobart and $32,000 in Darwin.
In Sydney, Melbourne and Canberra the percentage
difference between house and unit prices has never been greater than it is
currently. In Brisbane and Perth the differential is at a near record high.
This goes some way to explaining why we are seeing record high dwelling
commencements for units. In particular, there is a large volume of new unit
stock being constructed in Sydney, Melbourne and Brisbane. There is growing
demand for unit stock, both from investors and owner occupiers and the sheer
affordability difference between house and unit prices goes some way to explaining
this growing level of demand. The challenge will be ensuring that
overdevelopment doesn’t occur; demand has increased for higher density housing
stock but the level of apartment development currently taking place is
unprecedented. Remember that units have typically been the domain of investors
rather than owner occupiers.
(Source: CoreLogic )
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