House prices are surging ahead of apartments

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Traditional detached Australian homes could be a better buy than apartments at the moment if you’re looking for fast capital gains.

The rapid building and sale of apartments appears to be dampening the re-sale and therefore the capital gains when compared to houses.

Capital city house values are up 8.3% over the past year while unit values have risen just 5.6%, according to the CoreLogic RP Data April Home Value Index.

The trend is more noticeable in the key growth markets of Sydney and Melbourne. Sydney house values are up 15.5% while unit values have risen by 9.7%.

In Melbourne, the difference is more pronounced with house values 7.6% higher compared with a growth rate of just 1.9% across the unit market.

“A similar trend is evident across most of the capital cities and can likely be attributed to the higher supply levels in the apartment markets which are keeping a lid on the rate of capital gain,” says Tim Lawless, the head of research at CoreLogic RP Data.

The CoreLogic RP Data index for April shows that values across Australia’s combined capital cities increased by 0.8% for the month, down from a 1.4% in March.

Overall values shifted higher over the past month across every capital city except Canberra where there was a 1.5% drop over the month.

Despite the slower month, the annual rate of growth has seen a slight rebound with values now 7.9% higher over the past twelve months across the combined capital city index.

“Annually, the rate of capital gain has slowed since April last year, however, since the February rate cut the Sydney and, to a lesser extent, Melbourne housing markets have caught a second wind which is reflected in the higher rate of capital gain as well as the very strong auction results and rapid rate of sale for properties sold via private treaty,” Lawless says.

Sydney was the best performing capital city in April with a 5.4% rise. The weakest was Perth with a 1.6% drop.

Here’s the full index for April:

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