There has never been a better time to downsize from a house to a unit in Canberra.

 

It’s no secret that Australian property prices have boomed in the last couple of years. 

“This boom has created uniquely favourable circumstances for homeowners thinking about downsizing from a house to an apartment,” Accommodate Canberra, Managing Director, Peter Maloney said.

In addition to these ‘unique circumstances’, there are many reasons house owners may choose to downsize, such as:

• Mortgage free living

• Reduced utilities costs

• Free up equity

• New location

• Less garden

• Less maintenance

• Less driving

• Closer access to amenities

• More choice

• More environmentally friendly

• Make new friends

• Change is as good as a holiday 

 

So, in addition to these, what are the ‘unique circumstances’, and what has led to the stars aligning for homeowners, particularly in Canberra, wanting to downsize from a house to an apartment?

 

Massive increase in property prices

First, let’s look at the exceptional growth in property prices over the last couple of years and how this could benefit such a move.

“The Australian Bureau of Statistics (ABS) reported in March 2022, the strongest annual growth in residential property prices since this index began in 2003 – a whopping 23.7 per cent growth through the year to the December quarter 2021,” Peter Maloney reported.

Strongest growth in residential property prices on record

Top five cities for annual property price growth to December 2021:

1. Hobart (+29.8 per cent)

2. Canberra (+28.8 per cent)

3. Brisbane (+27.8 per cent)

4. Sydney (+26.7 per cent)

5. Adelaide (+23.9 per cent) 

Australian House prices rising twice as fast as units

“Dig deeper into these statistics, the growth is even more startling with house prices rising by 32.8 per cent throughout the year, nearly double the rise of attached dwellings (apartments) at 16.8 per cent,” Peter Maloney explained.

Top five cities for annual house price growth to December 2021:

1. Sydney (+32.9 per cent)

2. Canberra (+32.8 per cent)

3. Brisbane (+31.6 per cent)

4. Hobart (+30.5 per cent)

5. Adelaide (+27.2 per cent)

 Top five cities for annual attached dwellings (apartments) price growth to December 2021

1.  Hobart (+25.1 per cent)

2. Canberra (+16.8 per cent)

3. Sydney (+15.5 per cent)

4. Darwin (+12.3 per cent)

5. Melbourne (+11.8 per cent)

Housing market indicators also booming

ABS Head of Prices Statistics, Michelle Marquardt, said, "These results were consistent with a range of other housing market indicators.”

Ms Marquardt said these included:

• New lending commitments for housing rose to a record high value 

• Days on market fell

• Sales transaction volumes increased

• Record low interest rates, and

• strong demand.

So, what does this mean in dollars and cents? The ABS reported in the December quarter 2021 that the average dwelling price in Australia was $920,100.

Top five cities for average dwelling price for December quarter 2021:

1. NSW $1,207,200

2. ACT ($979,600)

3. Victoria ($956,100)

4. Queensland ($749,100)

5. Tasmania ($649,100)

Domain reported in September quarter 2021 that house prices had risen just over three times faster than units – this at a time when unit prices were reaching record high growth and sales prices.

Sydney, Melbourne, and Canberra houses in the $1m plus category

At that point Domain reported the average price and year on year percentage increases for houses to include three in the million dollars plus category. These were Sydney, Melbourne, and Canberra.

 (Source: Domain, powered by APM)

 (Source: Domain, powered by APM)

 

Record price gap between houses and units

At the time Domain particularly commented that in Canberra ‘the divergence of house and unit prices has created a record price gap between property types’.

The average price of a house in Canberra was $1,074,187 and the average price of a unit was $489,710. This meant that on average a house was $584,477, or 55 per cent, more expensive than a unit.

Supply and demand driving disparity in house and unit prices

So, what has driven this record high price disparity between houses and units in the ACT?

Basically, it comes down to good old supply and demand with more than five units constructed in Canberra for every house between 2011 and 2021,” Peter explained.

Going forward, the ACT Government has also forecast the ACT’s population to grow from about 450,000 to 600,000 by 2041, requiring at least an additional 100,000 homes to be built.

The ACT’s 2018 planning strategy proposes much of this to be achieved through urban infill, meaning higher density in existing suburbs. In fact, the ACT Government is planning to build 70 per cent in existing suburbs.

And you guessed it, this will continue the trend for at least the next 20 years with the construction of units far outstripping that of houses.

 

The stars have aligned for Canberra house owners looking to downsize to a unit

Basically, the growth in the price of houses has never been higher with prices in Canberra joining Sydney and Melbourne in the million dollar plus club.

House prices have risen twice as fast as unit prices in the ACT with units being on average more than 50 per cent cheaper than houses.

There has been a slight cooling in house prices but the ACT Government’s 20-year planning strategy to construct 70 per cent of its targeted 100,000 additional homes in existing suburbs, will mean prices and demand for houses will remain high.

“Record high house prices combined with record low interest rates and high demand for houses have created a unique opportunity for Canberrans looking to downsize from a house to a unit,” Peter concluded.