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Sydney upsizers face record gap between unit and property prices

Median house prices in Vaucluse are more than five times higher than unit prices, while house prices are at least four times higher in Bellevue Hill, Mosman and Strathfield. It’s a virtually impossible gap for most to close, although Powell said few apartment owners in these areas would expect to be able to scale locally.

The smallest price difference was in Ingleburn, at just under 10%, or $66,000.

Home prices in Riverstone, Quakers Hill, Norwest and Terrigal were also 30% below unit prices. Medians were only recorded and compared for suburbs with a minimum of 50 home and unit sales in the year through March.

Higher price differentials highlighted the extreme cost of land in domestic markets, Powell said. While land was more affordable in the outer areas, reducing the premium for houses, there were also more low-density apartments and villas. These and newer units might command higher prices, reducing the price difference.

In the Midwest, where the median for the $2.4 million home is three times the median for the $800,000 unit, it has become very difficult to expand locally, the agent said. buyer Hamada Alameddine from BuyerX.

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Apartments had suffered weaker price growth and owners had accumulated less equity. More and more people were leaving the area to modernize or opting for a bigger apartment.

“People moving from a unit to a house struggle if they rely on capital growth. Unless they have higher incomes or have the ability to borrow a lot more money, it’s difficult,” Alameddine said.

While upgrade companies have a narrower price gap to fill in more affordable markets, it’s still a big jump, as Norwest couple Dimple and Shamir Kuruvilla recently learned.

The couple hoped to upgrade from their one-bedroom apartment to a house, but quickly realized that their budget was insufficient, even though both were earning decent wages. The median home price in the suburbs sits at $1.4 million, or $250,000 more than the median unit price.

Ms Kuruvilla said the homes they were considering cost more than $1.2 million and often needed work. Then they also had to take stamp duty into account.

Shamir and Dimple Kuruvilla had hoped to upgrade from their one-bedroom apartment to a house, but opted for a larger unit. Credit:oscar colman

“Even though the [price] the gap is smaller here, I think it’s not easy…unless you really earn a lot of money, for people in average jobs, it’s really difficult,” he said. she stated.

Instead of taking on more debt than they could afford, they decided to buy a new two-bedroom, two-bathroom apartment. They hope to be in a better position to modernize in a few years.

Their sales agent, Maree McCrorie of McGrath Castle Hill, had seen a slight increase in people moving to larger units rather than houses, but noted that such apartments were not cheap to start with and more attractive to downsizing. She expected young Australians to increasingly stay in flats long-term due to affordability constraints, but noted convenience was also a factor.

Buyer’s agent Pete Wargent, co-founder of BuyersBuyers, said a lack of suitable stock, stiff competition and rapidly rising prices had made migration more difficult over the past two years.
Moving from a unit to a house in the suburbs was usually the hardest gap to bridge, he said.

However, conditions for upsizers would improve with increasing stock levels giving buyers more choice and time. He also expected the higher end of the market, which has traditionally been more volatile, to see bigger price drops, narrowing the price gap between homes and units.

While the borrowing power of upgraders would be affected by rising interest rates, most upgraders were not borrowing at their maximum capacity, he said. Rate hikes would also put downward pressure on real estate prices.