The rise of the detached dwelling

The proportion of houses sold always outweighs that of units. That proportion has risen over the past year. Why is that?

According to research data from CoreLogic, for every 1 unit sold in the year to January 2021, there were 2.9 house sales; a trend that has steadily been increasing over the past decade. The question is “what factors have contributed to this increasing demand for houses?” Following are some suggestions to answer this question.

• Introduction of HomeBuilder

HomeBuilder was announced in June 2020 and since then the number of new home sales has increased significantly. In fact, there was an almost 100% increase between the December quarters of 2019 and 2020.

Where the scheme favored detached houses over off the plan unit sales was the timeline for commencement of the build. HomeBuilder required construction to begin within three months of the contract date and this was achieved a lot more easily with houses than units that involve a number of commitments from the purchaser before the project commences.

• Investors traditionally prefer units

When investor finance is examined, there is a clear bias towards borrowing for the purchase of a unit as opposed to a house. Over the past 12 months, confidence in the investment market has fallen, with reduced rental yields, particularly in inner-city Sydney and Melbourne where residents predominantly in the hospitality, entertainment, and tourism sectors were most affected by the coronavirus pandemic, made investment less attractive.

• House sales rise when prices fall

Despite the fall in investment financing outlined above, this does not fully explain the fall of units as a share of total sales. The April to June quarter of 2019 represented the bottoming out of national housing values and when houses become more ‘affordable’ they become increasingly preferable to units. It was in this period that house sales had reached the highest concentration of sales over the decade. However, with the current surge in house prices, affordability may once again become a problem and will see home buyers reverting to units.

So what for the year ahead?

The HomeBuilder scheme is set to end, investor lending is poised to rise, and house prices are forecast to keep climbing. These factors could present an environment where detached dwellings are less attractive and popular.

On the converse, COVID-19 has introduced more remote working arrangements, allowing people to explore more affordable housing in regional areas.

In addition, unit rents have softened to a greater degree than house rents which may see investors gravitate towards detached dwellings.

And thirdly, low-interest rates may see first home buyers entering the market in greater numbers and continue to drive house sales.

If you are thinking of selling, now is one of the best times to start the conversation and planning. Our market conditions are unique right now and perfect to take advantage of.

We achieve our strongest results by following a proven strategy, tailor-made to your situation. Take the opportunity to gain from this advantage and my expertise and contact me now.

If, however, you or anyone you know would just like to discuss the current value of your home and the best strategy to get you the best price when you come to sell, you can contact me any time.

Below are a few properties we are currently marketing for sale.

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Published August 24, 2021

By Belinda Cassano