The gap between house and unit values has widened even further than ever, a new report shows.
Research conducted by Corelogic has revealed that underlying land value, scarcity factor and a desire for more space during the pandemic has led to a substantially larger rise in house values relative to unit values over the past four years.
At the onset of the pandemic in March 2020, the house premium, or the difference between median capital city house and unit values, was just 16.7%. Now, almost four years later, that premium has jumped to a whopping 45.2%, or $293,950.
CoreLogic research director Tim Lawless said that while houses have historically attracted a price premium over units, and have shown a higher rate of capital gain, several factors have led to the accelerated value growth for detached dwellings over recent years.
“The house premium rose sharply through the pandemic upswing as more people sought out space and were more willing and able to live further afield in our cities’, Lawless said.
“While we saw the premium contract through the early part of the rate hiking cycle as house values fell more than unit values, across the combined capitals the gap between house and unit values has since rebounded to a new record high as house values once again rise at a faster pace than units.”
Since the onset of the pandemic to January this year, capital city house values have increased by 33.9% or by $239,000. Unit values over the same period are up 11.2% or $65,235.
A similar trend has played out over the past 12 months with house values up 11.0% ($93,552) while unit values are up a lesser 6.9% ($41,789).
Across the capital cities, Sydney has seen the largest expansion in the house premium since the pandemic, with the gap between house and unit values widening by almost 36 percentage points. Melbourne, Perth, Adelaide and Brisbane have all seen their house premium grow between 15 and 16 percentage points over the same period, while Darwin has seen its house premium reduce by 12.2 points.
