Buyer preferences shift to apartments

There is an ongoing shift in preferences among homebuyers, as the market emerges from the impacts of the pandemic and amid the recent rate hikes, according to NAB’s latest Residential Property Survey.

NAB executive for homeownership Andy Kerr said property professionals observed that more buyers are leaning towards getting an apartment than houses.

“A trend we are seeing emerge from the pandemic is more Aussies considering  apartments over houses for the first time since the survey began, driven by return to office working and caution on borrowing amounts,” he said.

Here’s a comparison of median prices of houses and units in September according to CoreLogic’s Home Value Index:

As shown in the table, the biggest difference between the median prices for houses and units are in the bigger cities like Sydney, Melbourne, and Canberra. It is important to note that the decline in unit prices was far more severe in capital cities.

A recent PRD Real Estate report showed that homebuyer preferences appear to be swaying again to the more expensive states of New South Wales and Victoria, particularly in their respective capital cities due to the relative affordability of units.

Mr Kerr said the adage of “location, location, location” continued to hold true for many, with six in 10 property professionals highlighting good local shopping, restaurants and other amenities as key.

“Location is still one of the most critical buying factors and flexible working is here to stay, so where Aussies buy continues to be important — we all love walking to our local café or shops and this has continued to be a trend in the survey."

Holding a bigger weight still is the affordability of the property — eight in 10 property professionals said the amount buyers were prepared to borrow to buy was the biggest factor.

“Affordability and rising interest rates are absolutely part of the equation for home buyers —in a rising rate environment, where people are uncertain on when the rising rate cycle will end, Australians are more cautious on what they can afford,” Mr Kerr said.

However, due to rising interest rates, Mr Kerr said many homebuyers and existing homeowners might already be feeling the pressure.

“In terms of being able to pay a loan, it’s important to remember that banks ensure customers can appropriately manage their repayments should interest rates rise — for anyone who is concerned please get in touch with your bank, we are here to help,” he said.

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Photo by Vlada Karpovich from Pexels.