Unit prices are rising faster than houses as buyers seek out affordable properties, according to the RP Data-Rismark Hedonic Index report.
Over the past 12 months ending October, unit values jumped by 15.09% to $390,088, compared to houses, which experienced an 11.78% increase to a median price of $475,803.
Tim Lawless, RP Data residential research director, said recent gains on home units have exceeded those on houses in many areas as unit prices catch up. "Previously, house values had been growing faster than units," he said. "It appears that many buyers who previously wanted a house are now settling for home units or townhouses due to the higher degree of affordability these dwellings offer."
The report also showed that the Australian property market is continuing its strong run, with property values rising by 12.58% year-on-year.
Adelaide led the charge, with property values surging 23.89% to $364,824. Brisbane followed closely with a 19.25% jump in values to $410,168. Melbourne property prices surged 18.39%, with houses selling faster than in any other city - just 22 days on average. Lawless noted that this is the lowest average marketing time in any capital city.
Property markets in Perth, Darwin and Canberra saw significant slowdown in growth following their strong run in 2006 and the early part of 2007.
While the Sydney market continued to lag behind other capital cities, it has continued on a sustained but slower pace of growth, adding 7.38% to $511,775, boosted by strong gains in the inner city and metro coastal areas. Lawless pointed out that the Outer Western and South Western suburbs of Sydney and Central Coast areas continued to languish, as many buyers suffered mortgage stress. Demands are also falling, dragging property prices down by more than 10%.
Lawless said Sydney was the most divided market in 2007; however, Melbourne is now showing very similar behaviour, with the affluent areas notching up strong growth while the remainder of the market is relatively flat and in some cases showing negative growth.
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