Real estate markets are sending mixed messages to property investors considering whether to buy a detached dwelling or apartment at the start of the peak spring selling season.
Apartment prices and sales volumes are picking up after hitting the bottom of the market, according to valuers and banking analysts. Melbourne, Brisbane and Adelaide’s apartment prices are at the bottom of the market, Sydney is approaching it and Perth continues to decline (despite a sharp pick-up in mineral exports that triggered the last real estate boom), according to national valuer Herron Todd White.
Spring is traditionally the busiest time and there are hopes that an influx of new properties will end a two-year sales slump.
Apartment prices are showing early signs of recovery, having posted gains of 2.6 per cent, or nearly nine times the returns on houses for the past three months, according to global investment Morgan Stanley, which believes the market has stabilised.
Prices for detached dwellings in mainland real estate capitals are also languishing close to the bottom of the market, except for Sydney which still has some way to fall, accordingly to HTW. Canberra is at the top of the market and Adelaide is approaching it, it claims.
But long-term capital gains on houses continue to be better than apartments, according to Morgan Stanley.
Over the past six years the median – or middle – price of detached dwellings has been about 14 per cent higher than apartments, or $620,000 for a detached dwelling compared to $530,000 for an apartment.
Spring is traditionally the busiest time for sales and there are hopes that an influx of new properties will end a two-year slump across the country.
Buyers and sellers are encouraged by a sharp improvement in auction clearance rates, rising prices, falling interest rate and improved investor confidence after the federal election.
But volumes have been low and lenders are maintaining tight controls over who qualifies for a loan, despite regulators easing buffers used to assess whether a buyer can comfortably meet repayments.
Bakos says an attractive, well-constructed property in a popular postcode located near transport and other amenities, such as shops or the beach, will outperform whether it is an apartment or a house.