Demand for apartments is expected to outpace that for houses in Brisbane next year, with Domain forecasting apartment values to rise by up to 9% by the end of 2025, compared to a 7% increase for houses. Similarly, Sydney, Perth, and Adelaide are predicted to see apartment price growth matching that of houses, driven by affordability constraints and rising interest in unit living.

Key Points:

1. Predicted Price Growth:

   • Brisbane apartments: Up to 9% growth by 2025.
   • House prices in Brisbane: 7% growth.
   • Perth: 10% for both houses and apartments.
   • Adelaide: 9% for both.
   • Sydney: 6% for both.
      

2. Market Drivers:

   • Affordability Constraints: Escalating home prices and high borrowing costs are pushing buyers towards apartments and more affordable suburbs.
   • Wealthy Downsizers: Premium apartments are attracting high-income buyers, lifting median apartment values.
   • Supply Shortages: Limited new housing construction, due to high costs and labour shortages, is restricting supply and pushing up prices.
      

3. Industry Insights:

   • Nicola Powell, Domain:“Undersupply will limit price drops despite high interest rates and affordability issues.”
   • Tim Lawless, CoreLogic: Units may outperform houses short-term, but longer-term, houses will likely regain stronger growth.
   • Nerida Conisbee, Ray White: Premium apartments are driving price increases as cashed-up buyers pay more.
      

4. National Trends:

   • House prices nationally are forecast to rise 4%-6%, while apartment values will increase 3%-5%.
   • Canberra stands out, with house prices expected to rise 5%, but apartment values could drop by 4%.
      

5. Long-term Projections:

   • Brisbane and Adelaide house prices are predicted to surpass the $1 million median by the end of 2025, with Perth close behind.
   • A potential RBA cash rate cut in 2025 may further stimulate demand, particularly in the year’s second half.
      

6. Historical Performance:

   • Over the past decade, house prices outpaced apartment values in major cities:
     • Brisbane: House prices up 97.1%; units up 60%.
     • Sydney: House prices up 89.7%; units up 39.1%.
     • Melbourne: House prices up 66.4%; units up 22.6%.
        

7. Buyer Preferences:

   • The most in-demand property type nationwide: Four-bedroom houses.
   • Popular areas include Stanmore (Sydney), Albert Park (Melbourne), and Red Hill (Brisbane).

Takeaway:

The growing interest in apartments is reshaping the market as affordability pressures and supply constraints push buyers to consider more accessible options. Builders and developers should anticipate heightened demand for higher-end and affordable apartments, with the potential for strong growth in the medium term, particularly in Brisbane and Perth.

Read more on this story here.