Houses hammer unit sales. Image: Canva
  • House sales consistently outweigh unit sales, at about 3 to 1
  • The trend can be attributed to: HomeBuilder, low investor lending, falling prices and demand for space
  • The demand for houses could be challenged in the coming months

Historically house sales vastly outweigh unit sales in the Australian property market. But why?

According to CoreLogic, out of the estimated 459,308 properties transacted across the country in the year to January 2021, houses represented 74.2%. This means that for every unit sold over the year, there were 2.9 house sales.

While this is an increase from 73.2% of the previous year and a jump from 66.7% five years ago, this trend not unusual.

Portion of sales that are houses. Source: CoreLogic


Several factors can be attributed to the general rise in popularity of houses over units in the year to January 2021.

The HomeBuilder scheme

One obvious conclusion to draw is the impact of the government HomeBuilder scheme which has boosted home sales. The Housing Industry Association (HIA) reported that new home sales were almost 100% higher in the December 2020 quarter compared to the December 2019 quarter.

Those who applied could receive a $25,000 grant towards a new home. Eliza Owen from CoreLogic explains that the scheme’s tight timelines made it more attractive for building houses than units.

“….take up of the scheme was largely utilised for detached houses, rather than off the plan unit sales, with the latter requiring a number of purchaser commitments before the project commences.”

Low investor lending

The ABS has reported that investors have a closer affiliation with unit sales than houses.

Owen explained this trend.

“Comparing a decade of sales volumes with investor finance commitment values produced a correlation coefficient of 0.74 with units, and 0.48 with houses.”

In 2020 the average value lent to investors for the purchase of property was 22.7% below the monthly average at $5.1 billion per month, as CoreLogic reports.

“The relatively low levels of investment activity may have been compounded by weak rental markets, particularly in highly-concentrated investment markets like inner-city Sydney and Melbourne, which are largely comprised of unit stock. “

High demand for space

The pandemic could have been a driver for detached dwellings. The unpredictable lockdowns and the rise of remote working, have heightened the attractiveness of houses which generally offer more space.

Houses popularity with falling prices

According to CoreLogic, the period from April to June 2019 marked the peak of the concentration of house sales, at 75.1%. While investment lending was low at the time, it was not at rock bottom.

Plummeting house values were the driver of house sales as a portion of transactions for this period, as Owen stated.

“When houses become more affordable, they may become increasingly preferable to units. “

Future of houses

There could be changes to the popularity of houses over units on the horizon. Owen confirms this prediction.

“…an increase in house prices, such as has been observed in recent months, may pivot demand back to units, where purchase prices are generally lower and housing affordability less challenging. ”

“Based on this reasoning, there are headwinds for house sales in the year ahead.”

With the HomeBuilder scheme ending, investor confidence recovering and a vaccine role out rising house prices could pose challenges to the popularity of houses.

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