Why houses and units perform differently

By John Lindeman | 12 Apr 2022

Many forecasters lump all types of properties and all areas and localities together as if they always perform the same, but just as one suburb can perform differently from another, the performance of houses and units can vary significantly, even in the same locality.  

We’ve produced some heat maps using our patented Housing Market Prediction Solution to compare the forecast growth potential in Sydney Local Government Areas for houses and units during the next twelve months. 

These two heat maps show you that Sydney units and houses, even in the same council areas, are likely to perform very differently over the next year.  

The reason for these variations in their predicted performance is that unit and house markets respond to different dynamics.  

For example, most units are investor-owned which means that their performance is tied to current and future rental demand. As our international borders reopen, we can expect a huge rise in migrant and refugee arrivals, most of whom will settle in areas near employment opportunities and where rents are more affordable. Rising rents will motivate more investors to buy units in these locations and prices will increase. 

On the other hand, eighty per cent of houses and townhouses are purchased as homes. Recent price rises and prospective interest rate increases will cut buyer demand in first home buyer locations but have less effect in upper socio-economic areas, where price growth is likely to continue.   

That’s why houses and units can perform differently in the same area at the same time 

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John Lindeman is widely respected as one of Australia's leading property market analysts, authors and commentators.
Visit Lindeman Reports for more information.
He has well over fifteen years’ experience researching the nature and dynamics of the housing market at major data analysts.
John’s monthly column on housing market research featured in Australian Property Investor Magazine for over five years. He is a regular contributor to Your Investment Property Magazine and other property investment publications and e-newsletters such as Kevin Turners Real Estate Talk, Michael Yardney’s Property Update and Alan Kohler’s Eureka Report.
John also authored the landmark books for property investors, Mastering the Australian Housing Market, and Unlocking the Property Market, both published by Wileys.

To read more articles by John Lindeman, click here

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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