COVID has driven up demand for stand-alone houses in a big way, with data revealing the gulf between house and apartment prices in Canberra has never been greater.
The new data, from Upside Realty, indicates that cost differences between houses and apartments in the territory have jumped nearly 50 per cent in the last six months.
Upside Realty real estate agent Anthony Mewton says the $163,785 price gap that’s opened up between the median values of houses over apartments in Canberra is one of the highest on record.
“The last time we saw such a significant change in the gap between the two was a decrease in the gap between December 2017 and March 2019, but still the change in that time was only $100,000 and it was over 18 months ago,” Mr Mewton says.
“We are now seeing a change in the gap more than double that, in the last six months alone.”
Mr Mewton, who’s been selling homes in Canberra since the ’90s, says the desire for a house over an apartment has risen since the pandemic, with lockdowns exacerbating the appeal of a house and yard over apartment life.
“COVID-19 and the lockdowns have driven a desire for extra space and a backyard so people are looking for an opportunity to have a family home and a secure yard where the kids can play,” says Mr Mewton..
According to the data cited by Upside Realty, Canberra’s median house price currently sits at $1 million, while the median value for a Canberra unit is just more than $500,000.
In December, the median house price in Canberra was just more than $789,000, whereas apartments have only risen $6000 during that time.
The upside to the house price differential, Mr Mewton says, is that units are more affordable relative to houses than they have been for some time.
“The apartment market is undervalued so if you are a young person frustrated about affordability it’s a good time to jump in,” Mr Mewton says.
Like many aspiring home buyers, Luke McGuinness had to reconsider his dream of owning a house in Canberra.
The 19-year-old had been saving for a property for over a year but was priced out of the housing market and opted to buy an apartment instead because it was more affordable.
“I’ve bought off the plan in Narrabundah and it’s a two-bedroom, two-bathroom, two-car space apartment,” Mr McGuinness says.
Mr McGuiness, who works as a construction foreman, paid $615,000 for the unit, which he hopes to move into once it’s built next year.
“Prices are crazy, no wonder people think they can never own their own home,” Mr McGuinness says.
“I worked all through school to save a deposit. I feel lucky, it’s a good investment to own a property and get a good start in life.”
Mr Mewton says Mr McGuinness’ experience was fairly common due to the lack of affordable houses.
“If you have a young customer who is terrified of debt, the unit market is terrific value for money,” says Mr Mewton.
“You don’t want to be eating baked beans and fish fingers for the next six years while you service a massive mortgage.”
Dr Nicola Powell, chief of research and economics at All Homes, says Canberra’s house and unit price gap is the biggest of all the capital city markets.
While unit prices in Canberra have increased, Dr Powell says the rate of increase is far more modest than it has been for house prices.
“We have seen many more units built over houses in Canberra in the last few years and that in itself seems to be weighing on unit price growth. We have seen unit prices grow but at a subdued rate compared to houses.”
Dr Powell argues that “ultra” low interest rates coupled with the lack of houses for sale in Canberra has fuelled house-price growth.
“There are more buyers in the market than there are listings coming on and that has created this fierce competition and that’s one of the factors that’s driven strong rates of price growth for houses,” Dr Powell says.
While conceding that covid may have been a contributing factor to the escalation of house prices in the ACT especially for larger dwellings, Dr Powell suggests it would not be as great as it has been in cities subjected to extensive lockdowns, such as Sydney and Melbourne.
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