The Gap Between Unit And House Prices Is Growing In Sydney’s East
Sydney’s median house price rose to $1,211,488 in the December quarter but apartments didn’t fare quite as well.
What’s behind the widening gap in house and apartment values? Which suburbs are most affected? And what does it mean for you?
Sydney’s median house price lifted to $1,211,488 in December 2020, according to the latest Domain house price report. This represents an increase of 4.8% over the December quarter and a 6.7% increase over 2020. It also means that, by the end of 2020, Sydney’s median house value was already $13,000 higher than its 2017 peak and the market hasn’t slowed down in early 2021.
While this may please property owners, it can present challenges for those looking to get on the property ladder, as well as for those looking to upsize.
We take a look behind the data to find out exactly what’s happening and why.
Units “underperforming” the market
According to Domain, Sydney unit prices lost an average of$20,0000 when the COVID-19 pandemic struck. That made Sydney’s apartment market the poorest performing property market in the country during the worst of the pandemic.
Even when activity returned to the market towards the end of the year, units recorded just a 0.2% rise over the December quarter to hit $729,840.
Why apartment prices aren’t rising as quickly as house prices
The reason why apartment price growth lagging house price growth almost certainly comes down to COVID-19 and its effects. Throughout the pandemic, more people have been spending a lot more time at home through lockdowns, remote working and homeschooling. Many found that, with their previous outdoor and away-from-home lifestyle no longer possible, some serious outdoor space would make a big difference to their comfort levels.
At the same time, investor activity – which is a much bigger factor in the apartment market than the house market – declined rapidly, meaning that demand for apartments fell.
Suburbs most impacted in Sydney’s East
Domain compiled a list of the 15 suburbs with the widest price gap between house and unit prices in Sydney. And it was prestige suburbs that were hardest hit. After all, these are the suburbs where blue-chip premium homes often sit alongside smaller and older apartments.
Perhaps then, it’s little surprise that eight suburbs, or half of the entire list, are in the Eastern Suburbs.
Bellevue Hill came in at first place with a price gap of $4.4 million between the median unit and house price. This was closely followed by Vaucluse in second place with a gap of $4.25 million.
Rose Bay (with a gap of $2,287,500), Woollahra ($2,195,000), North Bondi ($1,935,000), Coogee ($1,855,000), Randwick ($1,643,500) and Paddington ($1,640,000) also made the top 15.
This shows us that units and houses really are two distinctly different markets, even within suburbs. It also shows us that the grim reality that those looking to upsize from a unit to a house often face a significant challenge if they want to remain in the same suburb.
Where did house prices rise most over 2020?
Almost every Sydney suburb experienced house price rises over 2020 and many of Sydney’s Eastern Suburbs were among the best performers.
Alexandria topped the list for house price growth but Clovelly came a close second, with prices rising 29.9% to $3.45 million. With architecturally unique properties close to the beach, like 1 Greville Street hitting the Clovelly market this year, we’re not surprised.
Perennial favourite, Woollahra, came fifth with 12-month growth of 23.5%. The median house price reached $3,395,000.
Despite the widening gap between houses and units, Rose Bay topped the list for unit price rises, with the median value increasing 29.3% over the year to hit $1,512,500. Rose Bay units can be truly unique, and come in all shapes and sizes – some with the most amazing views and outdoor areas, making them more like houses. Take, for example, this special property at 1/746 New South Head Road, which offers 384sqm of living.
The key message we take away from the Domain data is that despite the challenges 2020 threw at us, property in Sydney’s East remains very popular and the competition from buyers is strong, pushing prices to new highs.
That means 2021 is a good time to sell. It also means that it may be a good year to get on the property ladder for the first time or to downsize into an apartment. After all, once normalcy returns to our lives, we expect apartments to be back in high demand.
If you’re looking to buy or sell in Sydney’s eastern suburbs, don’t hesitate to get in touch with our team today.