CoreLogic’s latest data shows a cool trend: over the past few months, apartment prices in six out of ten major cities have been rising faster than house prices, with the gap reaching up to 11 times. This data shows that investors were looking for better rental returns and buyers looking for affordable options.
Apartment prices are increasing while house price growth is slowing down. Tim Lawless from CoreLogic thinks apartment prices might keep climbing faster than houses until affordability improves and the housing supplies increase. He says, "We might be in a phase where apartment prices start to close the gap with houses due to big value differences. With tight supply and increasing demand from first-home buyers escaping the rental pressure, apartment values could keep growing in the near to medium term."
Scott Kuru from Freedom Property Investors points out that the boost in rental yields and faster capital growth in prime spots are drawing more investors to apartments. CoreLogic’s data shows that rental yields for apartments across major cities have hit 4.5%. Kuru adds, "Investors are snapping up apartments because they’re cheaper and offer yields around 5%, which makes sense for cash flow. We expect big price jumps in apartments over the next few years due to limited new supply and strong immigration."
Performance of Apartments Across Major Australian Cities
Location | Percentage of Increase/Decrease of Apartment Price | Price Gap between Unit/Apartment and House (%) |
Brisbane | Increase 5% | 53.3% |
Sydney | Decrease 0.7% | 68.3% |
Adelaide | Decrease 2% | 55.7% |
Melbourne | Decrease 1.1% | 53.6% |
In Brisbane's upscale Teneriffe, apartment prices surged by 6.2%, dramatically outpacing house prices, which actually dropped by 4.8%. Similarly, in Kippa-Ring, located 31 kilometers north of the city, apartment prices increased more than nine times faster than houses, while in Mount Warren Park and Eagleby, the rise in apartment prices was over eight times greater than that of houses.
In Sydney, apartments in Picton, 90 kilometers southwest of the city, saw price hikes seven times higher than houses, with Willoughby showing a similar pattern. High demand for apartments in Telopea, Brighton-Le-Sands, and Strathfield South resulted in price increases five times greater than those of houses.
In Melbourne, apartments in Ascot Vale and Port Melbourne grew six times faster than house prices, with Essendon, Mont Albert, and St Kilda experiencing a fivefold increase.
In short, apartments are currently outperforming houses because of affordability issues and tight rental markets, but this could change if more apartments become available. Right now, prices for apartments are rising faster than houses due to the shortage. If you're thinking about buying, going for a high-quality apartment in a great location with good amenities could be a smart move, as these tend to be a better investment in the long run.
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