The surge in Sydney property prices to new highs in 2021 was not the only record set during the year.
As the median house price in Sydney rose to a staggering $1.6 million by the end of the year, the median apartment price hit a record $802,255, according to the property advertiser Domain. These figures included another record number – the price difference between an apartment and a house in Sydney.
“House prices have grown four times faster than units over the past year, a divergence that has created a record price gap with houses now double the price of a unit,” said Domain’s chief of research and economics Dr Nicola Powell.
“The rapid escalation in price is proving to be a significant financial barrier for entry buyers and upgraders against a backdrop of low wage growth,” it said.
Stage set for increased apartment demand
With the houses increasingly out of reach for many buyers, the stage is now set for a sustained increase in demand for apartments into 2022 and beyond.
CoreLogic’s research director Tim Lawless said: “With such a large value gap between the broad housing types, it’s no wonder we are seeing demand gradually transition towards higher density housing options simply because they are substantially more affordable than buying a house.”
Matt Gross from the National Property Research Company also expects a resurgence in the apartment market in 2022.
“Real estate economics suggests that the difference in house and apartment prices may well see higher densities as the only option for many purchasers who are new to the market,” he said.
Location, location, location
With houses in more desirable and accessible areas even more unaffordable for most first-home buyers, demand is set to increase for apartments in prime locations, near public transport, retail strips and centres, cafes, parks, and for families, good schools and childcare.
The price differential between houses and apartments will only magnify the appeal of living in a unit in a great location as opposed to a house in an undesirable one.
Looming apartment supply crunch
There are also warnings increased demand for apartments could be met with a lack of supply given the slowdown in construction activity during the pandemic.
The Property Council of Australia has forecast the supply of new apartments in Sydney, Melbourne and Brisbane in 2024 could be at 20 per cent of 2018 levels.
“While approval numbers are increasing, they mask a decline in construction activity that will lead us to a severe structural undersupply by 2024,” said the PCA’s chief executive Ken Morrison.
The property development industry body UDIA NSW has forecasted only 6,850 new apartments will be completed in Sydney in 2022 compared to the 20,500 that are needed each year to keep pace with population growth. This shortage is forecast to increase the cost of apartments.
Fortunately, Sydney builder and developer Deicorp is currently constructing around 3,000 apartments in prime sites across Sydney. From Rockdale, Zetland, Redfern through to Petersham, Ashfield, Rouse Hill, Tallawong and Castle Hill, there is a project that is perfect for everyone.
Deicorp specialises in transport-connected developments and all of their projects are next to or close to trains and transport links. Generous 3-bedroom apartments are proving to be an affordable alternative to older free-standing houses that are now becoming very expensive.
For details of Deicorp’s current projects, visit our website