Historically, house values have risen at a faster rate than units, but with affordability pressures, units are being preferred by many homebuyers.
In certain suburbs, unit prices have grown at more than double the rate of houses over the past year.
According to PropTrack's latest Home Price Index, national home prices reached a new peak in October, now 45% above their levels in March 2020.
Since the pandemic, both house and unit prices have seen strong growth. However, house prices have surged ahead, currently up 48%, while unit prices have increased 23%.
Although house prices have grown faster over the long term, the growth rates of houses and units over the past two years have been comparable, 9.8% and 9.1% respectively. In recent months, annual unit growth has been converging with house growth.
Searches for units on realestate.com.au have also been trending upwards since mid 2020. They now make up close to 40% of all buy searches on-site.
While the strong performance of units has been evident nationwide, there are areas where demand for units has been particularly high, resulting in significant price increases compared to houses.
In New South Wales, Engadine, Wagga Wagga and Merimbula, annual growth in unit values outpaced houses by 6.8 percentage points, 6 percentage points and 5.8 percentage points, respectively. This was the widest margin among all suburbs within the state.
In the past year, units in the Victorian suburbs of Safety Beach, Templestowe Lower and Warragul also experienced stronger growth in their values compared to houses.
| Suburb | State | Median house AVM | House YoY % growth | Median unit AVM | Unit YoY % growth | Difference between house and unit growth (ppt) |
| Engadine | NSW | $1,410,430 | 5.2% | $846,310 | 12.0% | 6.8ppt |
| Wagga Wagga | NSW | $662,540 | 3.6% | $434,615 | 9.6% | 6ppt |
| Merimbula | NSW | $932,399 | 0.4% | $526,156 | 6.2% | 5.8ppt |
| Safety Beach | VIC | $1,134,714 | 0.9% | $895,089 | 5.8% | 4.9ppt |
| Templestowe Lower | VIC | $1,387,302 | 0.0% | $978,911 | 4.0% | 3.9ppt |
| Warragul | VIC | $623,230 | 0.6% | $437,764 | 3.0% | 2.4ppt |
| Waterford | QLD | $735,877 | 15.1% | $519,067 | 37.9% | 22.8ppt |
| Nundah | QLD | $1,187,076 | 6.4% | $658,603 | 27.6% | 21.2ppt |
| Waterford West | QLD | $688,927 | 19.3% | $451,916 | 39.9% | 20.6ppt |
| Goodwood | SA | $1,424,884 | 1.4% | $585,365 | 21.1% | 19.6ppt |
| Henley Beach | SA | $1,452,752 | 10.2% | $680,806 | 19.4% | 9.2ppt |
| North Adelaide | SA | $1,238,677 | 5.1% | $627,967 | 12.2% | 7.1ppt |
| Orelia | WA | $593,796 | 37.1% | $331,394 | 49.9% | 12.8ppt |
| Shenton Park | WA | $1,858,630 | 11.8% | $616,505 | 24.2% | 12.4ppt |
| Success | WA | $837,682 | 24.3% | $495,604 | 36.6% | 12.3ppt |
Their respective increases were higher by 4.9 percentage points, 3.9 percentage points and 2.4 percentage points.
The largest difference in value growth between units and houses in Queensland was observed in Waterford, Nundah and Waterford West. Units in Waterford and Waterford West increased at more than than twice the percentage of houses in these suburbs in the past 12 months.
In Western Australia, units in the suburbs of Orelia, Shenton Park, and Success outpaced houses in annual value growth by more than 12 percentage points.
The stronger growth in unit values suggests higher demand compared to houses in these areas.
With housing affordability at its lowest level in three decades, it's to be expected that people are turning to more economical options, especially in suburbs where the gap between house and unit values is significant, like those mentioned above.
If housing affordability continues to decline and the time taken to save for deposits increases further, we anticipate that the growth in unit values may continue to outpace that of houses.
