Gulf Between House and Unit Prices Increasing
Australia is witnessing a flurry of “detached house” supply, in the process further widening the gulf between houses and units. The situation, as it presents itself, brings about an unhealthy dimension of our real estate.
Why despite being more affordable are the units given a miss by property investors? It is not that the units are not selling but houses selling much more vigorously is a clear indicator of how the market is trending.
House prices 28% higher
This also reflects upon the structure of house and unit prices. Already, the cumulative value of houses across capital cities is a good 28% higher than those of units. Only over the last year, house values outstripped unit values by 1.3%, widening the hiatus even further. Perth’s 23% bridge is perhaps the best effort to maintain parity- certainly looks that way considering that the gulf is a yawning 40% for Sydney and Melbourne.
Explained via an example, units are selling at an average of $600,000 if houses are selling at an average of $100, 0000 in Sydney and Melbourne. That’s some gulf!
More unit approvals
The government has risen to the deep-rooted implications of such a turnaround and is hence focussing on approving more unit dwellings. This may not be all that requires to be done though. For instance, our take on units is still prejudiced.
Take the new strata by laws into consideration. Developers can now demolish older units with only 75% vote (of residents). Earlier, 100% votes were required. If this is not indifference, allow me to know what is?
FHBs getting thin
We are certainly approaching times when the buyers will be elbowed out of contention from the detached property race. Already, the FHBs are all but out, a paltry 4% being their share of the real estate pie. Such buyers will look for unit alternatives.
However, older units may not suffice any more owing to the strata bylaws amendments and the new ones alone may not be able to meet the demand, as may rise due to the non-affordability of detached dwellings.
Will a hike in unit approvals mend things in your opinion?