Houses back outperforming units - the pronounced trend amid 2013's best and worst performing Sydney suburbs

House price growth in the top performing Sydney suburbs has done markedly better compared to the growth in top performing apartment suburbs, according to the latest findings from onthehouse’s property research arm Residex. There was also greater weakness amid the poorest performing units than the house localities.

"Given all the hype around units, this may surprise buyers," the consulting analyst for onthehouse, John Edwards noted.

Historically houses have outperformed units in capital growth - not necessarily by huge margins - and then of course over a few recent years we started to see good capital growth levels with apartments sometimes exceeding that of houses.

The brief trend came amid the push towards apartment living due to a demographic shifts, the shortage of housing, affordability, as well as changing lifestyles and the increased importance of proximity.

But it appears issues of increased apartment supply has possibly caught up with the trend which appears to be returning back to normal.

Edwards told me in 2013 Sydney houses had outperformed units in all respects.

"This comes down to house and land supply not meeting demand. A shortage of stock in the house and land market is driving up prices up”.

He stresses his list of best performers are indicators of how a market is going, and "not necessarily the place to rush out and buy in."

“Strong performing suburbs are often areas which have already seen the majority of their growth for this current cycle”, he said.

Mr Edwards said that knowing where a suburb is in its growth cycle was "key" to identifying the opportunity within that area. 

“If you combine the knowledge about a suburb’s growth cycle along with research data, suburb information and if you find out what the public considers the best streets are, then good buying decisions should result.”

Capital Growth Best Performers - Houses


Source: / Residex

Capital Growth Best Performers – Units


Source: / Residex

Capital Growth: Worst Performing Suburbs – Houses:


Source: / Residex

Capital Growth: Worst Performing Suburbs – Units:


Source: / Residex

Looking overall Edwards noted the median value of houses in Sydney was now nudging the $750,000 mark following a high rate of growth. It sits at $749,500 for houses with units median value in Sydney at $521,500. There has been 10.5% annual growth for Sydney houses compared to 4.3% for Sydney units in the year to November 2013.

"Residex models predicted growth, but not to this magnitude," he said.

But there had been periods when unit growth exceded house growth including the 2009-2010 financial year when Residex tracked annual Sydney house growth at 4.25%  compared to 6.5% for units. At that time the 10 year growth gap was a narrow 6.8% annually for houses and 6.35% for units.

And the 20 year growth data puts Sydney houses at 6.97% annually compared to 6.18% for units. So not that bigger difference with investors therefore wisely considering both investment types in their portfolio.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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