The price gap between buying an apartment and a house has hit record levels in the ACT with the capital recording the largest difference in the nation, making it harder for home owners to upsize, new analysis shows.
According to the latest Domain House Price Report, Canberra’s median house price was $817,810, while the median unit price was $447,143 – a jump of $370,667. This equates to an 83 per cent difference, the largest in the nation.
“The price gap between houses and units in the ACT has been rising since late 2014,” Domain senior research analyst Dr Nicola Powell said.
“When you look back at 2014, the property landscape in Canberra was different. Since then, we’ve seen a lot of development occur which has helped contain unit prices compared to houses.
“Houses have had much greater gains in prices whereas unit price growth has flatlined and had very minor growth in comparison.”
Dr Powell attributed the demand for houses to the type of buyer in the market including families wanting to upsize from a unit to a house, or move into a bigger house, and first-home buyers who are taking advantage of stamp duty being abolished on established houses.
When unit owner Fabiana Santana and her husband Claudio Barberato decided to upsize amid the pandemic, it took almost a dozen auctions and five months of house hunting before they purchased a four-bedroom house in Canberra’s Inner North.
“We were living in a two-bedroom apartment in Capital Tower in the city for six years and when we were both forced to work from home in March, we quickly realised how small our apartment was,” Ms Santana said.
With a checklist that included enough room for both Ms Santana and Mr Barberato to have separate home offices, as well as a spacious living and dining room, the couple eventually purchased a four-bedroom house in the Inner North in excess of $1 million and have only moved in this week.
“It was really difficult trying to find a house within our budget. We had to adjust our price range to follow the market,” she said.
“We went to one auction and registered to bid but were priced out at the first bid … It’s evident that the housing market is in high demand.
“If our living and working circumstances hadn’t changed, we probably would’ve held off from upsizing.”
Now, the couple have put their inner-city apartment on the market and are hoping a new buyer will love it as much as they did.
“There are plenty of apartments on the market right now so it’s hard to know whether it will find a buyer sooner or later,” she said.
A CoreLogic report, released last month, showed that while the housing market remained strong, 25.8 per cent of apartments in the ACT failed to resell at a higher value.
Andrew Chamberlain of Blackshaw Manuka said while the unit market hasn’t been trekking at the same trajectory as the housing market, demand was still there.
“First-home buyers and downsizers are driving unit sales at the moment. Units make an attractive option for home buyers because they offer low-maintenance living and convenience in terms of location,” he said.
However, investors have been cautious of getting into the market since the pandemic.
“Usually investors would be purchasing apartments but it seems they’ve been quite shy amid the pandemic, but we’re seeing them slowly return to the market,” Mr Chamberlain added.
Moving forward, Dr Powell expects the gap between houses and units to widen, noting that “a number of datasets point in that direction”.
“It wouldn’t surprise me if we see double-digit growth for house prices but we won’t see that for units,” Dr Powell said.
“Should that trend continue, it’ll stretch affordability for buyers and make it harder for those wanting to upsize from an apartment to a house.”
Dr Powell added that because of the capital’s ability to retain the spread of the virus, backed by the high public sector employment base, the ACT had become “an attractive place to reside”.
“Throughout this year, Canberra’s property market has been well-insulated compared to other cities and I think we will see positive interstate migration into the ACT soon,” she said.