In an interesting post from CoreLogic, discusses the supply on units, and concludes there are more coming on stream relatively in Brisbane and Melbourne, than Sydney, so risks are lower, here. But I found his observation about relative home price growth even more interesting. Unit prices are moving more slowly than houses.
We suggest the rising supply of units appears to be having a depressive impact on price growth and given the continued supply ahead, unit prices are unlikely to defy gravity in the major centres. Investors beware!
In the recently released Financial Stability Review (FSR) the Reserve Bank (RBA) talked about the supply risks surrounding the inner city apartment markets however, they did point to the fact that they see more potential risk in Melbourne and Brisbane. In this blog we explore the differences in pending apartment supply across the key capital cities.
The above chart highlights the change in house and unit values across the individual capital cities since the market entered its current growth phase in June 2012. The first thing to note is that in all cities except for Hobart, house values have risen by a greater amount than units. In fact, in all of the remaining capital cities except for Sydney unit values have increased by less than half the rate of houses. This highlights that despite the shift to more unit living, particularly in inner-city areas, ultimately there appears to be a healthier relationship between supply and demand for houses compared with units and as a result, house values have increased at a faster rate than units.
