House sellers make more than twice as much profit as unit sellers

“We know that wealth generates wealth through property ownership, but wealth also generates wealth through the level or price point you can access because historically the top end of the market has delivered higher returns over time,” she said.

“You can see that in the house and unit values ​​… it’s another level of inequality in the home ownership issue and it’s something to think about as we change the future of our city.”

She supports the government’s plans to encourage further development in areas with heavy traffic.

“That’s great and does mean more Australians have the opportunity to own their own home, but the result may be some home sellers receiving large windfalls that would not be the case in a market where capital gains are relatively small,” she said.

“One of the costs of trying to build more affordable housing is that you also build less profitable housing.”

PRD Real Estate chief economist Dr. Diaswati Mardiasmo agrees that the number of newly built detached homes is negligible compared to the supply of new units. Also, the number of existing homes for sale is small compared to the number of potential buyers, but the number of units sold is high.

“It’s almost impossible to find a house,” she said. “The demographics of Australia are still very much families — they want to find a house in the suburbs.”

Madiasmo said some small families might opt ​​for three-bedroom units, but most units have two bedrooms, which may not be suitable for families, especially if they want to have pets or a backyard.

“The outlook is pretty bleak, I’m not going to lie,” she said.

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“A lot of people are talking about moving to apartments, but for Australian families, apartments are not their first choice unless they need to. They still prefer houses.”

Buyer advocate Jarrod McCabe draws a distinction between high-rise apartment blocks, where the land component for individual dwellings may be low, and older boutique blocks.

“If you can get a nice renovated apartment in a good location, we’ve seen a lot more interest in the last six to 12 months, especially from first-home buyers, rather than investors,” said the director of Wakelin Property Advisory.

For apartment buyers looking to build equity, McCabe recommends higher-value areas and homes with a strong land component, such as small blocks on quiet streets with good access to public transport and shops.

Natural light, nice views, a better neighbourhood location, a courtyard and an active owners corporation were all attractions, he said, while sensible renovations could also help boost returns.

“(Older units) haven’t made a splash. They’ll have bigger growth,” he said.