Australia's house values have surged since COVID-19, leaving units in the dust
Capital city house values surged by 33.9 per cent, nearly three times the growth observed in unit values from the pandemic. Image: Canva.
  • Pandemic-driven demand sees house values surge, outpacing unit values significantly.
  • House premiums soar to $293,950, drastically increasing from the pandemic's onset.
  • Tim Lawless predicts affordability challenges may see demand for units rise.

The intrinsic value of land, a housing supply shortage, and the desire for bigger homes through the COVID-19 era have seen house values significantly eclipse unit values over the past four years, according to a new CoreLogic report.

Houses leave units trailing behind

At the pandemic’s start, the house premium, defined as the difference in median capital city house and unit values, was only 16.7%. Now, the premium has surged to 45.2%, or $293,950.

Premium for houses, combined capitals

Premium for houses, combined capitals
Source: CoreLogic.

CoreLogic research director, Tim Lawless, commented that while it was normal for houses to command higher prices and capital gains than units, a number of factors have intensified its value growth as of late.

“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,” he 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.”

Median house and unit values, combined capitals

Median house and unit values, combined capitals
Source: CoreLogic.

From the start of the pandemic to January 2024, capital city house values grew by 33.9%, or $239,000, almost three times the growth seen by units, which went up by 11.2%, or $65,235.

The last 12 months saw a similar pattern, with house values up 11.0% or $93,552, whereas unit values were up by 6.9% or $41,789.

Change in house premium

City Mar-2020 Jan-2023 Jan-2024 PPT Change from COVID PPT PPT Change Past 12mths
Sydney 32.9% 58.5% 68.4% 35.5 9.9
Melbourne 38.5% 52.7% 55.0% 16.5 2.3
Brisbane 41.2% 58.5% 56.3% 15.1 -2.2
Adelaide 42.3% 59.6% 58.1% 15.8 -1.5
Perth 32.7% 43.8% 49.1% 16.4 5.3
Hobart 27.9% 32.5% 29.3% 1.4 -3.2
Darwin 67.6% 58.0% 55.4% -12.2 -2.6
Canberra 59.2% 56.7% 65.0% 5.8 8.3
Combined Capitals 16.7% 39.3% 45.2% 28.5 5.9
Combined Regional 15.9% 18.6% 15.6% -0.3 -3.0
National 8.8% 27.9% 30.4% 21.6 2.5

Source: CoreLogic.

Sydney witnessed the greatest rise in house premium since the pandemic, with the difference between house and unit values lengthening by nearly 36 percentage points (ppts).

Meanwhile, house premiums in Melbourne, Perth, Adelaide, and Brisbane grew between 15 and 16 ppts, while Darwin’s house premium fell by 12.2 ppts.

“Over the past 12 months, we see a different picture. While Sydney tops the table again for the largest 12-month change in premium, followed by Canberra, several cities have seen the premium shrink back a little, including Brisbane and Adelaide. This could be reflective of homebuyers seeking out more affordable housing options, which has diverted more demand towards units,” Lawless said.

Suburbs with the largest house premium

Across the combined capitals, five of the suburbs with the greatest home premium belonged to Sydney, three were in Melbourne, and two in Perth.

Lawless said that the bulk of suburbs boasting a high house premium belonged to very wealthy markets.

Top 10 suburbs by largest house premium – combined capitals

Suburb SA4 House Median Unit Median House Premium
Bellevue Hill Sydney – Eastern Suburbs $9,684,557 $1,547,880 525.7%
Vaucluse Sydney – Eastern Suburbs $8,748,787 $1,458,691 499.8%
Mosman Park Perth – Inner $2,060,631 $387,841 431.3%
Strathfield Sydney – Inner West $3,750,205 $765,820 389.7%
Wembley Perth – Inner $1,581,941 $330,507 378.6%
Armadale Melbourne – Inner $2,963,629 $626,946 372.7%
Hawthorn Melbourne – Inner East $2,653,509 $583,595 354.7%
Carlton Melbourne – Inner $1,649,007 $372,883 342.2%
Greenwich Sydney – North Sydney & Hornsby $4,232,534 $1,000,941 322.9%
Mosman Sydney – North Sydney & Hornsby $5,853,675 $1,408,866 315.5%

Source: CoreLogic.

“In Sydney, the largest premium for a house is at Bellevue Hill with a 525% premium for houses over units. In Melbourne, it is Armadale with a 372% premium and in Perth, it is Mosman Park with a 431% premium. Homebuyers attracted to these blue-chip suburbs who can’t afford a freestanding home may be attracted to the significantly more affordable price point to get into a high-end suburb.”

Suburbs with the smallest house premium

Top 10 suburbs by smallest house premium – combined capitals

Suburb SA4 House Median Unit Median House Premium
Nollamara Perth – North West $526,314 $497,687 5.8%
Balga Perth – North West $461,343 $435,253 6.0%
Westminster Perth – North West $530,168 $478,261 10.9%
Doveton Melbourne – South East $587,219 $522,362 12.4%
Carlisle Perth – South East $727,387 $644,852 12.8%
Mandurah Mandurah $454,298 $393,398 15.5%
Ettalong Beach Central Coast $1,057,201 $906,803 16.6%
Altona North Melbourne – West $899,549 $770,884 16.7%
Girrawheen Perth – North West $476,839 $407,567 17.0%
South Windsor Sydney – Outer West and Blue Mountains $783,366 $665,189 17.8%

Source: CoreLogic.

“Conversely, the suburbs with the smallest differential in price between a house and unit may offer good buying opportunities for those able to stretch themselves to secure a piece of land without the hefty premium we’re seeing more broadly across many parts of our cities. With houses typically yielding a stronger capital gain outcome over time, these suburbs with a lower house premium could be strong investment opportunities.”

As home prices fall further out of reach for much of Australia’s population, Lawless predicted that the relative affordability of the medium to high-density sector will draw heightened demand as buyers become more amenable to living in smaller homes closer to essential amenities.

“Alongside lower prices, medium to high-density housing options are often strategically located close to transport networks, major working nodes and high amenity precincts.”

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