During the middle of 2021 it was becoming evident the rise in house prices was creating a unsustainable value gap between houses and apartments. This was most pronounced in Melbourne where the impact of extended lockdowns had driven many people to not only hoard toilet paper, but buy their own bunker of “terra firma”. The widening price gap between houses and apartments was reported in the AFR in July 2021 and is continuing as highlighted again in a study by Domain released today.
The housing / apartment gap can only stretch so far and already we have seen a pick up in apartment prices with Melbourne’s apartment median price increasing by 3.9% over the last quarter to Dec 21, which is a record high of $593,387 and the strongest quarterly gain in two years. As the world slowly moves back to some form of normal, so to will the price gap between houses and apartments meaning the apartment market price growth has more improving to do.
Domain chief of research and economics Nicola Powell said “Prices were unlikely to have hit their peak yet, although weaknesses were emerging in Sydney’s and Melbourne’s markets, as well as signs that the pace of growth was slowing down elsewhere.”
“Overall, they’re likely to still go up from here but not by as much. It’s more about that wave of growth, that really super strong momentum we saw that’s what has peaked,” she said.