Australians who were previously denied the chance to buy a home are now increasingly opting for apartments, new figures show.
New CoreLogic data released on Thursday revealed that near-record immigration drove house prices to record levels in July in Sydney, Brisbane, Adelaide and Perth.
In these same cities, apartment values grew at a faster pace than home values last month.
Tim Lawless, research director at CoreLogic, said this was happening because construction activity failed to keep pace with population growth, leaving a severe housing shortage.
“Beyond the number of homes available for purchase, the supply of newly built homes remains insufficient in relation to population growth,” he said.
Lawless said low affordability and higher interest rates meant younger buyers were turning to apartments, realising they could not afford to buy a home on their own.
“With limited housing affordability, lower borrowing capacity and increased activity from both investors and first-time home buyers, it is not surprising to see the unit sector outperform for a change,” he said.
‘Underfloor heating prices are currently rising faster than house prices in most capital cities.’
Australians who have never been able to afford to buy a home are increasingly opting for apartments (pictured are apartments in Waterloo, Sydney)
The median price of an apartment in Sydney rose 0.4 per cent last month to $852,766, while equivalent house prices rose 0.2 per cent to a new record of $1.473 billion.
But in the markets of the provincial capitals, the difference was even more pronounced.
Brisbane’s median unit price last month rose 1.9 per cent to $638,909, even more dramatic than the 1 per cent rise in home values to an all-time high of $966,825.
Over the year, apartment values in Queensland’s capital have soared 19.6 per cent, compared with 15.2 per cent for houses, as the state’s south-eastern corner continued to see an influx of interstate migration.
In Adelaide, apartment values in July rose 2.7 per cent to $546,429, while house prices rose 1.6 per cent to a new record of $830,609.
The 18.5 percent annual increase in units was even stronger than the 15.1 percent rise in home values.
In Perth, unit values rose 2.1 per cent to $540,546, while house values rose 2 per cent to a record high of $808,038.
There is strong interstate migration to more affordable capital cities as building approvals fail to keep pace with population growth.
In the year to March, just 158,933 new homes were started as a net 487,940 migrants moved to Australia – this figure includes skilled migrants and international students.
With Australian households made up of 2.5 people on average, that left 90,607 people struggling to find somewhere to live, according to data from the Australian Bureau of Statistics.
While house prices hit record highs in Sydney, Brisbane, Adelaide and Perth, in Melbourne they peaked in March 2022, two months before the Reserve Bank embarked on the first of 13 interest rate hikes.
A 12-year high cash rate of 4.35 percent also means banks can only lend borrowers 5.2 times their pre-tax salary, implying property values are falling in cities where interstate migration is weak.
Brisbane’s median unit price rose 1.9 per cent last month to $638,909, an even more dramatic increase than the 1 per cent rise in home values.
House prices in the Victorian capital fell 0.5 per cent to $944,138 last month, making it even cheaper than Brisbane as unit values dipped 0.2 per cent to $610,300.
Hobart prices also peaked in March 2022, with home values falling 0.8 per cent last month to $686,660.
Canberra property prices peaked in May 2022, with unit values falling 0.6 per cent to $583,073 in July.
Darwin is Australia’s worst-performing market, with house prices still below the peak reached in May 2014 during an earlier liquefied natural gas boom.
Unit values in the Northern Territory capital fell 0.3 per cent last month to $367,487.
