The media in Australia has been very vocal about the housing crisis, however for them housing typically represents a house on land.

The gap between house prices & unit prices (townhouses, units & apartments) has historically been in the range of 15%-25%.

However since Covid, that gap has widened, and sits somewhere around 50% plus (on an average), within the same suburbs.

In addition, an oversupply of apartments in Melbourne over the last decade, exacerbated this gap between house and unit prices, due to apartments price stagnation.

With interest rates being at current levels, affordability being lower due to high inflation, and the pre-Covid buzz coming back to major CBD’s in Australia, we estimate that the demand for units will increase over the next few years, and the gap between house prices & unit prices will reduce, although possibly not to the same levels as 2020.

This may represent good selling opportunities for vendors who have not experienced desired capital appreciation on their units in the last decade, but also great buying opportunities for buyers seeking lifestyle, and investors who are looking to get into the real estate market with a lower budget.