The real reason Australian apartment prices are surging

Apartment prices are rising faster than house prices in most capital cities as more home buyers are forced to compromise on the type of property they purchase due to affordability constraints and restricted borrowing capacity. More owner-occupiers are deciding their budgets are too stretched and they would rather buy a high–quality strata home instead of a house requiring renovations.

Additionally, growing demand from investors due to rising rents, low vacancy rates and ongoing capital growth is also pushing up apartment prices. Investors now represent 37.1 percent of the value of new loans to property buyers, according to the Australian Bureau of Statistics (ABS). This is the highest level in eight years. The number of loans issued to investors has increased by almost 25 percent over the past year.

First home buyers are also adding to demand for units, with support from the Bank of Mum and Dad a key factor allowing some young buyers to purchase their first homes when, historically, higher interest rates would normally dampen demand from starter buyers on strict budgets.

CoreLogic’s research director, Tim Lawless, said units had outperformed in every capital city over the past three months except Darwin and Canberra, where greater supply of medium to high–density housing meant less competition per property and a reduction in median prices over the period.

“With stretched housing affordability, lower borrowing capacity and a lift in both investor and first home buyer activity, it’s not surprising to see the unit sector outperforming for a change,” he said.

Mr Lawless explained that most cities now have a median house value that is at least 1.5 times that of apartments. Choosing apartments over houses means buyers may have more choice over how much debt they are willing to take on and could also buy in more attractive lifestyle locations.

Increasing demand for apartments is being met with ongoing restricted supply in the new apartment market. In its latest monthly market report, CoreLogic said the supply of newly built homes remained insufficient relative to population growth. ABS data shows approvals for strata-title properties have fallen 22.1 percent over the 12 months to June.

Over the three months to July 31, CoreLogic data shows apartment values grew by 1.4 percent in Sydney vs. 1.1 percent for houses. Units rose 5.8 percent in Brisbane vs. 3.4 percent for houses. In Adelaide, unit values rose 7.1 percent vs. 4.7 percent for houses. In Perth, apartment prices rose 6.4 percent vs. 6.2 percent for houses. Hobart apartment prices rose 2.2 percent while house prices fell 1.5 percent. In Melbourne, apartments outperformed houses but the median values of both fell. Unit prices fell 0.2 percent while house prices fell 1.2 percent.

Overall, the national median dwelling price lifted 0.5 percent in June, which was the 18th consecutive month of growth. However, CoreLogic noted in its report that “it is clear momentum is leaving the cycle and conditions are becoming more diverse”. The market is very strong in Perth, Brisbane and Adelaide and weak in Melbourne, Hobart and Darwin, where overall median dwelling values fell over the past three months. The pace of property price growth has also “slowed markedly” in Sydney as the number of listings for sale returns to normal levels.

Mr Lawless said supply was the key differentiating factor in the performance of Australia’s capital city markets. “The number of homes for sale in Brisbane, Adelaide and Perth is more than 30 percent below average for this time of the year, while weaker markets like Melbourne and Hobart are recording advertised supply well above average levels,” he said.

A breathtaking view and a lush quarter-acre block are high up the wish list with any lifestyle property, but this contemporary Buderim residence takes things to another level.

Designed and built by owners Stu and Nat Faid, the Sunshine Coast home reflects their vision and incredible attention to detail.

As an architect and designer, Nat believes a prime position deserves an incredible project.

“The heart of the house is undoubtedly the living area and expansive deck. At over 100sq m and elevated more than 6m above the ground, you literally feel like you’re floating. We love how the views stretch from the Glass House Mountains along the coastline to Mooloolaba. Across the ocean, you can even see the sandbanks on Moreton Island,” she says.

While the views and the 1024sq m land parcel make their mark, it’s the suspended 12m heated shipping container swimming pool that’s making waves locally.

“When people arrive, the first thing they do is look up,” Nat adds.

After purchasing the property in 2021, the pair knew the existing house wouldn’t live up to their family of four, but they fell in love with the location and outlook so decided to adapt.

Initially, the pool’s unique design was simply a reaction to an everyday Queensland problem, but ultimately became a feature.

“The pool was at first a product of practicality. We wanted to be able to watch the kids in the pool from the house, but to do that required elevating the pool more than six meters off the ground,” Stu says.

“When we looked at the engineering required, it conflicted with our minimal-touch ethos in preserving the land and the visual aesthetic of the finished design. What followed was a lot of searching for a solution, and as luck would have it, the answer was almost on our doorstep.”

Shipping Container Pools seemed like a no-brainer answer to the pool problem. Having moved internationally multiple times, the couple saw an opportunity to weave their personal story into the fabric of their new home.

“The opportunity to incorporate a nod to that chapter of our life into the build was too good to miss,” he says.

“It also unashamedly reinforces the origins of the pool construction, which ties into the rest of the design in the house. Throughout the home, we have embraced where the old meets the new, we have not tried to blend, cover or hide the origins of the home, we have chosen instead to make sure the evolution of the house is clear to see.”

The Faids’ global family journey is evident throughout the home, from the grand Middle Eastern entry doors sourced from Dubai where the couple once lived, to the remarkable views from the Glass House Mountains to Mooloolaba.

Created to enjoy every season, the house has a space for all eventualities with an open plan living area spilling out to the full-width deck and pool, a sleek kitchen with an Ilve integrated fridge and freezer, Bosch ovens, an induction cooktop, built-in coffee machine and microwave, two dishwashers, filtered water and a butler’s pantry.

Four spacious bedrooms each have built-ins, the main features a large ensuite with twin vanities and two more bedrooms share a“Jack and Jill” style bathroom. There is also a third full bathroom.

The Buderim home is 12.5kms from Mooloolaba and the Mooloolaba River National Park with the Sunshine Coast Airport 13.5kms to the north, however Stu adds that there is rarely a reason to leave.

“It would be fair to say that apart from popping down the hill to go to the beach, we often go days without ever leaving the village. It’s really is a wonderful spot.”

Packed with mod cons, the Buderim home also features six-zone ducted air-conditioning, engineered oak floors and a double-sided Stuv wood-burning fireplace, a mudroom, heated floors and sensor lights in the bathrooms. There is also a private elevator, solar power and battery, as well as landscaped gardens and a large lock up garage and shed.

The property at 10 Orient Court, Buderim is listed with Zoe Byrne and Greg Ward from Ray White Buderim and will go to auction on September 22 at 9am at Mercedes-Benz Sunshine Coast, 65 Maroochy Blvd, Maroochydore.

The real reason Australian apartment prices are surging

Units have outperformed houses in every capital city except Darwin and Canberra over the past three months

This sky-high home on the Sunshine Coast with iconic shipping container pool is a testament to modern design and engineering.