Explosive growth: Why units could outperform houses in coming years

The gap between house and unit values is sitting at multi-decade highs as buyers continue to prioritise bigger homes and more space.

But exclusive research from market analysts PRD predicts that may be about to change, with unit price growth across a number of SA councils having reached new record highs – forcing some buyers to pay almost double what they did five years ago.

Tea Tree Gully Council had the biggest price swing, according to the data, with a four-bedroom unit now worth $740,000, on average.

This compares to just $389,500 in 2019, translating to a 90 per cent increase over a five-year period.

SEE WHERE UNIT PRICES ROSE THE MOST OVER THE PAST FIVE YEARS

The cost of a three-bedroom unit within the same council district also jumped by 85.9 per cent – from $345,000 to $641,250, while one bedroom apartments in Campbelltown rose 89.9 per cent – from $185,000 to $351,250.

One-bedroom units also proved hot property in West Torrens, with buyers now paying $150,000 more (78.9 per cent) than they did five years ago.

$156k a year to live in Adelaide’s most expensive rental

SA’s most in-demand suburbs revealed

Travel icon sells penthouse in multimillion-dollar deal

This three-bedroom apartment at 1211/68 Elizabeth Street, Adelaide recently sold for $760,000.

This two-bedroom unit at 1/24 Riverway, Fulham Gardens recently sold for $688,888.

In Prospect, buyers now have to find an additional $315,000 for a three-bedroom unit – representing a 68.1 per cent increase, while the cost of a two-bedroom unit rose by $230,500, or 79.6 per cent.

In Marion, one and two-bedroom units saw the highest level of popularity with prices jumping by 69.8 per cent and 74.6 per cent respectively.

Two-bedroom units were also popular in Holdfast Bay with prices now 67.9 per cent higher than they were in 2019.

PRD chief economist Diaswati Mardiasmo said while pandemic border closures and lockdowns caused many to pack up and leave the inner city in search of lifestyle and location, low housing stock and rising property prices were now forcing buyers back to the city.

“We know that there is a housing shortage everywhere but when it comes to Adelaide, the shortage is massive,” she said.

“People simply can’t find houses anymore but have the budget for one, so they reroute that money to a unit.

“The starting price of a unit is much lower than a house so, if a buyer were to play in the $400,000 unit market but comes in with a $700,000 house budget, then they are already winning the game as they can make a higher offer and still walk away with savings.

“So not only are they competing against buyers on a budget but they are pushing up prices…and have done so for a while now.”

MORE NEWS

Win the latest St John lottery house … at auction

Adelaide home prices to struggle in 2025, surge in 2026

Hottest house in Australia turns heads in cracker sale

PRD chief economist Dr Diaswati “Asti” Mardiasmo

This three-bedroom unit at 216/6-14 Metro Parade, Mawson Lakes recently sold for $535,000.

Ms Mardiasmo said Adelaide’s unit market was likely to experience further price growth in the coming years, underpinned by strong developer activity.

“When I look at housing plans of what is about to come to the market, most of those properties are units or apartments, not houses,” she said.

“In terms of cost analysis, that makes sense. In most locations, you can generally build four-plus storey apartment complexes, so if you have three units on each floor, that’s 12 units you can sell.

“By comparison, on that same block of land you may only be able to put up three houses or townhouses, so if you went down that route, you’d be selling less stock.

“So a lot more developers are starting to think about their returns, especially as apartments increase in value.”

Source link