Australia is building a record number of apartments right now, particularly in the eastern states.
Given the attention the high-rise construction boom is receiving, leading to concern that Australia is perhaps building too many apartments in some areas, many believe that a price correction will follow suit.
While many believe that is likely to occur, particularly in Brisbane and to a lesser degree Melbourne, there’s little indication that it’s happening, yet.
This table from CoreLogic, released as part of its Home Value Index report for March earlier today, underlines that point.
It shows the monthly, quarterly and year-on-year change for dwelling prices across the nation’s capitals, breaking the result down by prices for houses and units.
According to the settled sales over the month, the median unit price rose by 0.9% in March, leaving the increase on a year earlier at 9.8%.
In the March quarter alone, prices rose by an impressive 4.2%, so nearly half of the annual increase. It was also above the 3.4% increase reported in capital city house prices over that period.
So based off settled sales in the first three months of the year, price growth in units outstripped that in houses.
That largely reflected strength in Sydney unit prices which rose by 5.6% during the quarter, although those in Australia’s other two major unit markets — Melbourne and Brisbane — still grew by 2.9% and 0.9% respectively over the same period.
That suggests that concerns surrounding oversupply in these markets have yet to drag on prices, at least not yet.
However, there’s still a lot of high-density supply to hit these markets. Throw in recent limitations on interest-only mortgage lending introduced by APRA — which will likely slow investor activity in Australia’s housing market — and the outlook for prices in these markets becomes even murkier.
A rebound in investor activity since the middle of last year has been cited by many analysts as one reason why dwelling prices in Sydney and Melbourne have outperformed other capital cities recently.