There’s a gap that’s widening between houses and units in Melbourne and it’s making the property market a two-speed economy.
House prices surged by $3,600 a week during the last quarter of 2020 in Melbourne, with the median house price hitting $936,000 – that’s 64 per cent higher than the median unit price.
While there has always been a gap between the two, that gap usually sits lower at around the 50 per cent mark.
So while it currently sits much higher than that, the forecasts are that the gap is set to keep widening, with experts saying the inner-city apartment market is still oversupplied.
Domain senior research analyst Nicola Powell told the Sydney Morning Herald it was rare to see the two prices moving in different directions.
“Weaker investor activity has disproportionately impacted unit prices because they tend to be the preferred property type,” she said.
“There are also particular locations with increased supply as a result of heightened development in recent years.”
“Changed lifestyle preferences post-lockdown and the option of remote working have driven demand to outer suburban and regional locations as buyers seek affordability, liveability, space and greater value for money.”
Real Estate Buyers Agents Association president Rich Harvey said now Melbourne was out of its extended coronavirus lockdown, there was some pent-up demand for property.
“I’m expecting 7 per cent to 8 per cent growth over the year,” he told Sydney Morning Herald.
“Freestanding homes have a much higher demand than apartments. Inner-city Melbourne will struggle and brand-new off-the-plan apartments will probably sell at a loss.”
“It’s a similar trend in Sydney and Melbourne with units.”
Property Investment Professionals of Australia chairman and buyers’ agent Ben Kingsley said he’s surprised by the strength of the house market in Melbourne.
“We are well on the way to double-digit growth in Melbourne and high single-to-double-digit growth in Sydney,” he told SMH.
“Buy medium and high-density inner city ring apartments are disturbed. There are falling rents and there’s no real support at all for that stock.”
“The buyers are staring down reduced values and we’re not at the bottom of the market yet.”
Mr Kingsley said there will continue to be a deepening divide between house and unit prices in the future.
