Apartments out in the suburbs are making a comeback in the property market as a new wave of investor interest and housing affordability struggles cause attention to be turned to the sector.
Domain data shows unit prices in Australia have jumped 1.8 per cent in the first three months of this year.
“The outlook for units has improved,” Domain senior research analyst Nicola Powell told Australian Financial Review.
“Investors who have been on the sidelines are coming back with renewed appetite, as shown by the large jump in investor lending, and home buyers are now increasingly willing to compromise on the property type, which will support a recovery in unit prices.”
SQM Research managing director Louis Christopher said units further out from the city weren’t as affected by the reduction in international migration and were also benefitted by the increasing tend towards working from home.
“We’ve seen better performance of the unit markets in the middle and outer rings of capiatal cities as they are not reliant on international migration to begin with,” he told AFR.
“They are also positively impacted by the move away from the inner cities towards the suburbs and regions.”
Melbourne’s median unit price has hit a record high of $568,793 after jumping 2.2 per cent in the March quarter.
Unit prices in Melbourne’s inner south, north-east, outer east and Mornington Peninsula are all at record highs, but those in the CBD are still showing price weakness.
“I think the units that are likely to see stronger growth are those that are aimed at owner-occupiers outside the CBDs, such as lower density units as opposed to high rises,” said Ms Powell.
“I think investment grade units in the CBDs are still facing a lot of challenges including high vacancies, increased supply, and lower demand due to the lack of international migration.”