Last week we looked at the average buying power across each state, the proportion of total sales at prices affordable for the average buyer and the council areas with the greatest proportion of sales at or below average prices for houses. This week we take a look at the same analysis for the unit market.
Across Australia’s capital cities the median unit price is currently recorded at $410,000 which is $82,000 more affordable than the median house price. Of course there are far fewer units nationally than houses however, they are in most instances a much more affordable purchase option, especially for price sensitive purchasers with limited funds. They can also offer purchasers the opportunity to live within a location in which they would be unlikely to be able to afford a house. For investors, units also generally provide a more attractive rental yield.
On average, purchasers in New South Wales demonstrated the greatest buying power, spending on average $350,444 and Tasmanian purchasers had the least amount of buying power at $216,556. This range in purchasing power is to be expected and reflects the characteristics of these markets with New South Wales having the most expensive property market and Tasmania the most affordable.
The results for the proportion of unit sales at or below the average buying power are much more encouraging than the results we reported last week for houses, except in Canberra. Whilst Perth struggled with its proportion of affordable house sales it has fared much better across the unit market with 36.1% of sales at or below $324,444. Sydney has also performed very well with 35.0% of all unit sales over the last 12 months priced below $350,444.
All cities except Canberra have recorded in excess of 20% of all sales as being below the determined borrowing power which indicates, as you’d expect, that the price sensitive buyers have a far greater selection of properties to purchase should they target unit product rather than houses.
Despite the fact that Canberra had the lowest proportion of affordable unit sales, The Jerrabomberra District along with the Kwinana Local Government Area (LGA) in Perth recorded every single unit sale over the last year within the affordable price ranges of $301,556 and $324,444 respectively.
Across the list of LGA’s / Districts detailed, Sydney LGA’s led the way providing 10 of the top 20 capital city LGA’s with the greatest proportion of sales being affordable for non first time buyers. Most of the Sydney LGA’s detailed are situated some way from the CBD area and all have a median price below $400,000.
Despite the fact that the regions which generally have recorded the greatest proportion of total unit sales below the respective buying power tended to be further away from the city centre, there remains plenty of opportunities closer to the city.
The Sydney LGA recorded 22.9% of all unit sales as being below $350,444. In Victoria the Melbourne LGA had 23.9% of sales at or below $310,889, Brisbane LGA had 13.9% of unit sales below $314,778 and the Perth LGA had 48.3% of unit sales below $324,444.
These results clearly indicate that purchasing a unit not only provides a far greater opportunity for the average purchaser to get into the market but it also dramatically increases the options of location for a purchaser.
Whilst the most plentiful opportunities to purchase affordable units remain in the outer areas of the city, as they do for houses, the opportunities to own units in quality inner city locations are much greater. Given this, if buyers are willing to sacrifice the block of land and house they can greatly improve their purchasing options and will likely be able to own in much more desirable locations.
Tim Lawless is the Director of Property Research at RP Data.