Units Outperform Houses
Australia’s unit market is continuing to outperform its freestanding house market.
The latest data from PropTrack shows nationally and at a capital city level that unit price growth outpaced house price growth in the 12 months to May 2025.
There were four capital cities, Brisbane, Adelaide, Perth and Melbourne (although both its house and unit values dropped), where unit markets performed better than house markets.
It is a continuing trend seen throughout Australia as buyers are priced out of house markets and discover that units offer a more affordable option, particularly within popular lifestyle locations.
PropTrack economist Anne Flaherty says even unit markets in regional centres performed well.
“The outperformance of units has been particularly pronounced in the regions, where values are up 5.3% versus houses at 4.5%.”
“While houses have historically seen stronger capital growth compared to units, the high cost of developing units in the current market, combined with the lower price point at which they sell, has led to fewer of these properties being developed.”
Australia’s Price Growth Hotspots
While national property price growth has eased in the past 12 months, new analysis reveals the locations that are still outperforming, with many still in the broader capital city markets.
Cotality (formerly CoreLogic) analysis shows that in the 12 months to May, the strongest locations were in Perth and Adelaide.
Despite a slowdown of transaction levels, the Perth market had strong dwelling price growth, led by the Swan North East area, which is up by 14.2%, Mundaring up 13.3% and Kwinana up 12.9%.
Adelaide’s Gawler region is up 13.9%, Playford North 12% and Mitcham South 12.3%.
The outer LGAs of Greater Brisbane were the best performers, with Beenleigh up 12.8%, Ipswich Hinterland up by 11.4% and Caboolture up by 11%.
Sydney’s top performer is the Fairfield region, with median dwelling values up by 7.4%, followed by St Mary’s up 7.3% and Wollondilly which is up by 7.3%.
Growth was much more subdued in Melbourne. The best performers are the Tullamarine – Broadmeadows which is up 1.9%, Frankston up 1.8% and Hobsons Bay up 1.7%.
Where Investors Go Wrong
New investor loans are continuing to increase as buyers make a return to the market.
The number of new loans going to investors has risen solidly, with ABS figures showing a 13.2% increase between the December 2023 and December 2024 quarter.
But analysis shows that despite the increase in investors, more than half are selling off too quickly.
The research by the Australian Housing and Urban Research Institute (AHURI) and Curtin University shows more than 20% of investors sell within a year and more than half only keep the property for two years.
Only a third of landlords hold their investment properties for more than 20 years.
Lead author Dr Ranjodh Singh says investors who hold for longer are more likely to build wealth.
The research shows that nationally 55% of all rental investments are held for two years, 28% for two to six years, and 17% for more than six years.
AI Taking Over Planning
In an effort to speed up development approvals and deliver desperately needed housing faster, some Australian councils are trialling the use of AI to sort through building applications.
Burwood, Blacktown, Inner West, Bayside, Randwick, Canterbury Bankstown, Cumberland and Hawkesbury councils are all taking part in a state government trial of AI to help fast track development approvals.
It is hoped the system will alleviate the time it takes for planners to have to wade through applications to determine whether they actually meet current regulations.
The system is being trialled on simple applications, such as new houses, renovations or duplexes.
The AI, trained with the Council’s own planning regulations, should be able to quickly determine those applications that already meet existing rules.
The approval system will not be fully automated, as a council planner will sign off on the project after the public feedback stage.
NSW Housing Minister Paul Scully says the AI is designed to assist, not replace, town planners.
Luxury Market Moving
Australia’s smaller capital cities of Perth and Brisbane are leading southern capitals for growth in their luxury property markets.
There are four Australian capital cities named in Knight Frank’s Prime Global Cities Index (PGCI) Q1 2025.
in the luxury market of 3.8% in the 12 months to March, Brisbane comes in at 18th spot with growth of 2.8%
The two capital beat out Sydney (36th spot with values down 0.7%) and Melbourne (40th spot with values down 2.1%).
The list tracks the changes in prime residential prices across 44 cities worldwide, with Seoul in Korea the top performer with growth of 18.4%.
Associate director at Knight Frank’s Australian partner McGrath Estate Agents, Adam Ross, says there is likely to be ongoing sustainable price growth of prestige homes across most cities for the remainder of 2025, particularly with heightened expat activity as they benefit from the currency exchange.
The report says limited supply is sustaining price growth.
