Affordability Drives Apartment Demand
In the past three months, apartments have outpaced houses in price growth across almost every Australian capital city, with Darwin and Canberra being the exceptions due to higher supply levels. This trend also extends to regional NSW and Victoria, where apartments outperformed houses, while in regional Queensland, the price growth difference was minimal.
This shift is unusual, as houses typically appreciate faster due to land value. However, current market dynamics, including strained affordability from rising interest rates, are pushing more buyers toward apartments. With lenders applying a 3% buffer to home loan rates, many buyers find it difficult to finance a house in high-value markets like Sydney, leading them to opt for apartments or townhouses instead.
In addition, strong demand from investors and first-home buyers is driving apartment prices higher. New home loan data shows a surge in loans to investors, while first-home buyers, often supported by family, are also a significant market force. A shortage of new apartment supply further fuels this trend. For those considering apartments, benefits include less financial pressure, better locations, and the potential for strong capital growth.
