Growing Gap Between House and Unit Prices in Australia

If you’ve been following the Australian property market, you can’t help but notice the growing gap between house and unit prices. This trend is not new, as we have seen the growth of house prices outpacing units since late 2021.

But why have houses experienced more growth compared to units?

One significant factor contributing to this trend is the changing preferences of buyers. Since the pandemic, more people are looking for properties with larger living spaces and outdoor areas. With the rise of remote work, homeowners now value having things like dedicated workspaces as essential features to have in their homes.

Another factor is the supply and demand dynamics in the market.

Pandemic lockdowns, the closure of borders, and the decline in overseas students and workers had a detrimental impact on the inner-city unit market. This situation led to a significant increase in the supply of units, which meant that unit prices were more susceptible to falling demand.

Even though the economy and real estate market is now in full recovery mode, it is still anticipated that the gap between house and unit prices will continue to widen.

Will this gap widen?

At present, the pipeline of unit developments in major cities is still quite high. Rising interest rates and low consumer confidence could lead to a decrease in demand, and this could potentially widen the gap between house and unit price growth. However, it is expected that the return of overseas buyers and a growing population will continue to drive demand for units, particularly in cities like Sydney and Melbourne. The development of new infrastructure and amenities in these cities could also contribute to the growth of the unit market. And if we see the cash rate easing in 2024 as predicted, it could further boost the demand for units and close the gap between house and unit prices.


Once the current pipeline of unit developments is completed, we could see a decrease in supply, which could help drive up unit prices. Factors such as population growth, infrastructure development, and interest rates will play a crucial role in determining the demand for units and ultimately impact their prices.

Investors should carefully consider all factors when deciding to invest in units or houses and keep a close eye on market trends for each city. With proper research and understanding of the current landscape, investors can make informed decisions and potentially reap the benefits of growth in both unit and house prices.

At Ironfish, we believe in the importance of staying updated on market conditions. We offer resources and educational events to help investors make informed investment decisions to achieve long-term success in the property market. Whether you’re interested in investing in houses or units, our team of experienced professionals can provide tailored advice to help you achieve your investment objectives.

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