High-density living is increasing in popularity as available land close to city centres "dries up" and single dwelling becomes too expensive, according to RP Data.
Research by RP Data property analyst Cameron Kusher in the company's weekly Property Pulse shows that over the last 15 years, unit sales nationally and for all capital cities combined rose by around 31 per cent.
Estimated August 2011 sales transaction results showed there were 22,407 capital city dwelling sales and 33,856 sales around the country. Capital city unit sales accounted for 33.5 per cent of total sales, compared with 28.2 per cent 15 years ago. Unit sales in markets outside capital cities represented 20.2 per cent of total sales, compared with 18 per cent 15 years ago.
By capital city, in August 2011 in Sydney, sales units accounted for 42.8 per cent of total sales, and in Melbourne, units were 33.8 per cent of total sales. Unit sales in Canberra were 35.9 per cent of total sales and in Darwin, unit sales accounted for 32 per cent of sales. Kusher says the common theme in Sydney, Melbourne and Canberra is that they are the most expensive capital city markets.
He explains that over the 12 months to September 2011, the change in capital city unit values, which were down 1.1 per cent, has outperformed capital city houses, which fell 4.1 per cent.
"[This is] a trend that has been replicated over the past five years with house values increasing at an average annual rate of 4.8 per cent and unit values increasing by a greater 5.9 per cent for the same period," he says.
The proportion of unit sales to overall sales has begun to increase, although they are well below record levels, the research reveals.
Kusher argues the recent improvement is because affordability barriers are high and many buyers are looking at higher density housing options where the entry prices tend to be lower.
"Lower levels of affordability have resulted in a renewed focus on units as they are $45,000 more affordable than detached houses across the combined capital cities based on median selling prices over the September 2011 quarter. Dramatic improvements in home loan affordability in 2008 and 2009 saw buyers show a preference for houses rather than units.
"We believe that over the coming years, demand for higher density living will continue to grow as our cities expand."
He says Melbourne has done a better job at providing newer high-density housing in recent years than other capital cities.
"Should other cities follow this lead, a greater supply will likely lead to improvements in housing affordability with developers having to offer competitive pricing to secure sales.
"From a rental perspective, an increase in supply will also help stem rental price inflation and enable greater opportunities for those choosing to rent rather than own their own home," he says.
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