Apartment prices soaring by double-digit figures as those locked out of houses look for alternative

Apartment prices across Australia are soaring as first-home buyers who can no longer afford houses take advantage of the Federal Government’s 5 per cent deposit scheme.

The national median house price increased by double-digits in the year to late January, edging closer to $1 million, despite the threat of an interest rate rise next week.

But apartment prices surged by more than 10 per cent in Perth, Brisbane, Adelaide, Darwin, the Gold Coast and the Sunshine Coast, new data from real estate group Ray White showed.

In the West Australian capital, they surged by a nation-leading 20.4 per cent to $690,000.

Equivalent prices in Brisbane rose by 16.3 per cent to $800,000, ahead of Adelaide’s 14.3 per cent increase to $680,000.

In south-east Queensland, average Gold Coast apartment values rose by 12.8 per cent to $920,000, while on the Sunshine Coast, they went up by 10.7 per cent to $910,000.

Darwin, Australia’s cheapest market, saw its apartment prices climb by 12.6 per cent to $430,000.

Even stronger apartment price growth is expected this year when stricter lending rules come into effect.

With median house prices above the Federal Government’s caps for the new 5 per cent deposit scheme, first home buyers in particular are turning to apartments in cities with strong job creation, Ray White chief economist Nerida Conisbee told The Nightly.

“What we’re finding is houses under that price cap are less available than they were and as a result people are looking at apartments and buying apartments which is why we’re starting to see an outperformance,” she said.

The national median price for a home with a backyard, covering capital cities and regional areas, rose by an annual pace of 12.5 per cent to $973,000.

Capital city house prices climbed 12.8 per cent over the year to $1.13 million as regional prices edged up by 12.4 per cent to $760,000.

Intriguingly Melbourne, a major hub for overseas migration, is now Australia’s sixth-most expensive capital city market despite being Australia’s second-most populated city after Sydney, with the hottest property markets having a population influx from interstate rather than overseas migration.

The average full-time worker earning $104,520 with a 20 per cent deposit would struggle to buy a property worth more than $655,000 on their own. New regulations from February 1 will require lenders to restrict the proportion of loans where borrowers are taking on debt that is six times or more of what they earn.

“It is likely to lead to more demand for apartments primarily just because it is so hard to find houses at that price point,” Ms Conisbee said.

Houses surge

Darwin, Australia’s most affordable capital city market, had the biggest annual house price surge of 19.6 per cent, taking the mid-point to $720,000.

Among the major state capitals, Perth had the strongest house price growth of 18 per cent, taking the middle price to $980,000.

Brisbane house prices recorded a 16.8 per cent increase to $1.16 million.

In Adelaide, house prices went up by 14.4 per cent to $970,000.

Sydney, Australia’s most expensive market at $1.76 million, had an 8.8 per cent house price rise over the year but apartment values grew by a more subdued 4.4 per cent to $870,000.

Canberra house prices increased by 8 per cent to $1.05 million. Apartment values edged up by a lesser 4.5 per cent to $640,000.

Hobart prices went up by 7.1 per cent to $770,000. Tasmania capital unit values edged up by 5.9 per cent to $590,000.

Melbourne prices edged up by 7 per cent to $950,000 while unit price growth was weak at 2.9 per cent, taking the midpoint to $650,000.

South-east Queensland was home to Australia’s most expensive major regional markets with Gold Coast house prices rising by 15.7 per cent over the year to $1.45 million.

Sunshine Coast house prices went up by 13.3 per cent to $1.3 million.