New figures show Australians who could never afford to buy a home are increasingly opting for apartments.
New data from CoreLogic released on Thursday showed house prices hit record highs in Sydney, Brisbane, Adelaide and Perth in July on near-record high immigration.
In these cities, apartment prices rose faster than house prices last month.
According to Tim Lawless, research director at CoreLogic, this was because construction activity was unable to keep up with population growth, creating a severe housing shortage.
“In addition to the number of houses for sale, the supply of newly built houses is still insufficient in relation to population growth,” he said.
Mr Lawless said poor affordability and higher interest rates meant younger buyers were turning to apartments as they realised they could not afford to buy a home themselves.
“Given tight housing affordability, lower borrowing capacity and the increase in both investors and first-home buyers, it is not surprising that the housing market is performing better for a change,” he said.
‘In most capital cities, homes are now being built faster than houses.’
Australians who could never buy a home are increasingly opting for apartments, new figures show (pictured are apartments in Sydney’s Waterloo)
The average price for a Sydney apartment rose 0.4 per cent to $852,766 last month, while house prices rose 0.2 per cent to a new record high of $1.473 million.
But in the markets of the provincial capitals the difference was even greater.
The average house price in Brisbane rose 1.9 per cent to $638,909 last month, even more dramatic than the 1 per cent rise in house prices to a record high of $966,825.
In recent years, apartment prices in Queensland’s capital have risen by 19.6 per cent, compared with 15.2 per cent for houses, as the south-eastern corner of the state experiences a steady influx of people moving from state to state.
In Adelaide, apartment prices rose 2.7 per cent in July to $546,429, while house prices rose 1.6 per cent to a new record high of $830,609.
The 18.5 percent annual increase for apartments was even stronger than the 15.1 percent increase in house prices.
In Perth, house prices rose 2.1 per cent to $540,546, while residential property prices rose 2 per cent to a record high of $808,038.
There is a strong migration of residents from other states to the more affordable capital cities as building permits fail to keep pace with population growth.
In the year to March, construction started on just 158,933 new homes, while there were 487,940 net migrants moving to Australia. This figure includes skilled migrants and international students.
According to data from the Australian Bureau of Statistics, an Australian household consists of an average of 2.5 people, which means there are 90,607 people in total who are struggling to find housing.
While house prices hit record highs in Sydney, Brisbane, Adelaide and Perth, they peaked in Melbourne in March 2022, two months before the Reserve Bank implemented the first of 13 rate hikes.
The cash rate of 4.35 percent is the highest it has been in 12 years, and it also means that banks can only lend borrowers 5.2 times their salary (excluding taxes). This means that house prices are falling in cities where there is little interstate migration.
The average house price in Brisbane rose 1.9 per cent to $638,909 last month, even more dramatic than the 1 per cent increase in house prices.
House prices in the Victorian capital fell 0.5 percent last month to $944,138, making the city even cheaper than Brisbane, where house prices fell 0.2 percent to $610,300.
Prices in Hobart also peaked in March 2022, with house prices falling 0.8 per cent last month to $686,660.
Canberra house prices peaked in May 2022, with property values falling 0.6 per cent to $583,073 in July.
Darwin is Australia’s worst performing market, with house prices still below their peak in May 2014, during the earlier liquefied natural gas boom.
House prices in the Northern Territory capital fell 0.3 percent last month to $367,487.