Apartment owners looking to upgrade to a house in the same suburb will find it easier in Melbourne’s outer areas than in inner-city postcodes, data analysis shows.
The flood of people searching out more space during the pandemic saw the difference between median unit and house prices , with some suburbs recording a differential of more than $3 million.
In March, Melbourne’s overall price difference between units and houses was still at a record $513,369, but this divide is expected to tighten, Domain’s chief of research and economics Dr Nicola Powell said.
Competition from buyers, including returning , are expected to drive up unit prices, making it easier for upgraders in coming months.
In a downturn, it can mean an easier journey for people looking to upgrade, it can definitely narrow the price gap, including in those pricier areas, Powell said.
This data really shows the premium put on the value of a block of land, especially in those more expensive suburbs.
Analysis of Domain house and unit price data showed the best deals for those looking to upgrade in the same suburbs were found in Melbourne’s northwest and southeast.
The narrowest gap between unit and house prices was in Glenroy, where an extra $78,500 could see buyers upsize.
Broadmeadows, with a price difference of $135,000 between the two property types, and Carrum Downs with a $149,500 difference, also offered a more affordable entry to the housing market for upgraders.
Barry Plant Glenroy sales manager Roy Khoder said many buyers could upgrade within three years in areas like Glenroy, Broadmeadows and Hadfield, which were more affordable for families needing a bigger home.
You can get really good value for money, Khoder said. Even somewhere like Oak Park, that’s what drives upsizers there.
On the other side of the city, in Carrum Downs, first-home buyers are getting into units, even though some fixer upper houses may be cheaper to buy.
Carrum Downs’ Michelle Stephens said those with budgets that don’t stretch to renovations choose a unit before buying a home.
For a lot of first-home buyers, buying a house is a little out of reach, or it needs work, so they would have to spend extra money, so they do go into a more modern unit, Stephens said.
People’s circumstances dictated when they could upgrade, with some selling up their unit to buy a house as soon as 12 months later, while others waited longer.
Because it’s affordable, people do change over a bit more, she said.
In more expensive suburbs, however, upgrading is less easy, with unit owners waiting longer before selling a unit and buying a house.
In Mentone, Natalie and Matthew Jeffery have owned the three-bedroom unit they are now selling, for 13 years.
The couple, who now have two children Thomas and Sienna, need a larger family home and hope to stay in the beachside suburb to be close to specialist schools and medical care the family needs.
The gap in median prices between a unit and house in Mentone is $650,000, meaning the couple is aware it may be difficult to buy exactly what they want.
I was surprised about house prices, but it has dropped a bit, so we’re taking the opportunity now, Jeffery said. We have no choice because we need a bigger home, so it might be a matter … of making compromises on which part of the suburb we live in.
While bigger price gaps in some suburbs make upsizing more difficult, in Melbourne’s most expensive suburbs it can become almost impossible.
In Toorak, unit owners need an extra $3,440,500 to upgrade, Malvern’s price gap is $2. 265 million, and Balwyn unit owners needed an extra $1. 93 million to buy a house.
I tell people, if they are considering an upgrade in the inner suburbs, that it is the hardest move because of the price difference, Woodards South Yarra director Luke Piccolo said.
Most people purchasing a house already have significant funds behind them and other people would be priced out, so upgrading rarely works.