Top 10 suburbs named where house prices are soaring above units
The gap between house and unit prices continues to grow as space becomes a rarer commodity but rental markets have seen a completely different trend emerge.
The phrase safe as houses has long been an adage to describe the security of investing in houses, but it seems the saying is not necessarily translating as readily to the unit market.
The gulf between houses and units when it comes to capital growth is expanding, with Sydney’s property market the most prominent when it comes to houses outperforming smaller building types.
According to CoreLogic, Sydney has seen the largest expansion in the house premium since the pandemic, with the gap between house and unit values widening by almost 36 percentage points, catapulting it from sixth to first position on the premium leagues table.
Melbourne, Perth, Adelaide and Brisbane have all seen their house premium grow between 15 and 16 percentage points over the same period.
Only Darwin has a seen a reversal of this trend, with its house premium actually reduced by 12.2 percentage points.
Tim Lawless, Research Director, CoreLogic, said while houses have historically attracted a price premium over units, and have shown a higher rate of capital gain, several factors have led to the accelerated value growth for detached dwellings over recent years.
“The house premium rose sharply through the pandemic upswing as more people sought out space and were more willing and able to live further afield in our cities.
“While we saw the premium contract through the early part of the rate hiking cycle as house values fell more than unit values, across the combined capitals the gap between house and unit values has since rebounded to a new record high as house values once again rise at a faster pace than units.”
The trend that has played out over the past five years shows no sign of abating.
Since the onset of the pandemic to January this year, capital city house values have increased by 33.9 per cent or by $239,000. Unit values over the same period are up 11.2 per cent or $65,235.
Over the past 12 months house values are up 11.0 per cent ($93,552) while unit values are up a lesser 6.9 per cent ($41,789).
Affluent markets delivering house price gains
Some eye-watering numbers highlight how the gap between house and unit prices are diverging rapidly in the wealthier suburbs.
Across the combined capitals, five of the suburbs with the largest house premium are in Sydney, three are in Melbourne and two in Perth.
Top 10 suburbs by largest house premium – combined capitals
| Suburb | SA3 Name | SA4 Name | Houses | Units | House premium |
|---|---|---|---|---|---|
| Bellevue Hill | Eastern Suburbs - North | Sydney - Eastern Suburbs | $9,684,557 | $1,547,880 | 525.7% |
| Vaucluse | Eastern Suburbs - North | Sydney - Eastern Suburbs | $8,748,787 | $1,458,691 | 499.8% |
| Mosman Park (WA) | Cottesloe - Claremont | Perth - Inner | $2,060,631 | $387,841 | 431.3% |
| Strathfield (NSW) | Strathfield - Burwood - Ashfield | Sydney - Inner West | $3,750,205 | $765,820 | 389.7% |
| Wembley | Perth City | Perth - Inner | $1,581,941 | $330,507 | 378.6% |
| Armadale (VIC) | Stonnington - West | Melbourne - Inner | $2,963,629 | $626,946 | 372.7% |
| Hawthorn (VIC) | Boroondara | Melbourne - Inner East | $2,653,509 | $583,595 | 354.7% |
| Carlton (VIC) | Melbourne City | Melbourne - Inner | $1,649,007 | $372,883 | 342.2% |
| Greenwich | Chatswood - Lane Cove | Sydney - North Sydney and Hornsby | $4,232,534 | $1,000,941 | 322.9% |
| Mosman | North Sydney - Mosman | Sydney - North Sydney and Hornsby | $5,853,675 | $1,408,866 | 315.5% |
“House prices have moved out of reach for a growing portion of the population, especially those seeking a first home or lower income households,” Mr Lawless said.
While the numbers may suggest houses are the more lucrative investment prospect, Mr Lawless suggested the affordability of smaller dwellings may result in an increase in demand.
The lower to mid-priced suburbs dominate the list of suburbs that have seen the least divergence of house and unit prices.
Seven of the top 10 have median house prices below $750,000.
Top 10 suburbs by smallest house premium – combined capitals
| Suburb | SA3 Name | SA4 Name | Houses | Units | House premium |
|---|---|---|---|---|---|
| Nollamara | Stirling | Perth - North West | $526,314 | $497,687 | 5.8% |
| Balga | Stirling | Perth - North West | $461,343 | $435,253 | 6.0% |
| Westminster | Stirling | Perth - North West | $530,168 | $478,261 | 10.9% |
| Doveton | Casey - North | Melbourne - South East | $587,219 | $522,362 | 12.4% |
| Carlisle | Belmont - Victoria Park | Perth - South East | $727,387 | $644,852 | 12.8% |
| Mandurah | Mandurah | Mandurah | $454,298 | $393,398 | 15.5% |
| Ettalong Beach | Gosford | Central Coast | $1,057,201 | $906,803 | 16.6% |
| Altona North | Hobsons Bay | Melbourne - West | $899,549 | $770,884 | 16.7% |
| Girrawheen | Wanneroo | Perth - North West | $476,839 | $407,567 | 17.0% |
| South Windsor | Richmond - Windsor | Sydney - Outer West and Blue Mountains | $783,366 | $665,189 | 17.8% |
“With housing affordability remaining a key challenge across Australia, the substantially lower price points across the medium to high density sector are likely to become increasingly in demand as buyers become more willing to sacrifice space for proximity to essential amenities.”
Different story for rent price gains
While houses might be making all the gains in property values, the rental market has seen a different pattern emerge.
A rental crisis that has seen prices soar over the past two years is more pronounced in the unit market than for houses.
Year-on-year, national weekly house rents have increased by 10.5 per cent, an increase of $55 per week.
However, unit rents have increased by 17 per cent, which equates to an $80 weekly increase.
This variance is even more pronounced in the combined capital cities where the growth in weekly unit rents is double that of weekly house rental growth.
All capital cities had a larger increase in unit rents compared to houses, except for Canberra and Hobart, where prices have remained flat.
Brisbane had the largest variance between house and unit growth rates with a median house rent of $600, up 9.1 per cent, and $535 for a unit, up 18.9 per cent year-on-year.
The most expensive city to rent a house or a unit is Sydney where the median rent for a house is $720 and $650 for units.
However, in the past year house rents in Sydney have increased by 10.8 per cent compared to 18.2 per cent for units.
Karen Dellow, Senior Audience Analyst, PropTrack, attributed the higher unit rent increases to a return of normality post-Covid.
“Units were very affordable during the pandemic as many lay empty in the cities due to the lack of overseas students, migrant workers, and interstate migrants.
“Prices dropped below normal market value because demand was so low, especially in Melbourne and Sydney, but at the same time house rents continued to rise.
“It wasn't until the end of 2021 and early 2022 when unit rental prices began to recover, coinciding with the opening of the borders.”
Ms Dellow said that since then, a combination of increased demand and low stock has driven up rents as more potential renters are turning up to inspections and competition is at an all-time high.
“With houses costing more to rent than units, many renters are having to downsize their expectations.
“In addition, many renters are offering more than the asking rent to beat the competition, which has driven weekly rents even higher.
“This shift in the market has helped units regain the price growth that was lost during the pandemic and this growth is likely to continue due to record low vacancy rates.”
