Australia’s House–Unit Divide: Why the Gap Is Growing

Australia’s property market is experiencing one of the widest performance gaps on record between houses and units. While units are traditionally seen as the affordable entry point, several factors have held back their performance compared to houses.

On a recent segment of The Today Show, InvestorKit Founder and Head of Research Arjun Paliwal broke down the data and explained why this divide is unlikely to close soon — and why it may even get bigger.

Four Key Drivers Behind the Divide

1. Oversupply of units – Between 2013 and 2016, Australia saw a surge in unit approvals. This building boom left many markets with more supply than demand, and that oversupply continues to weigh on performance.

2. Building defects and buyer confidence – High-profile defect cases in major cities have damaged trust in the unit sector. Many buyers remain wary of newer developments, holding back demand and slowing growth.

3. Demand for space – Post-pandemic, Australians placed a premium on space. Larger homes with land became more desirable, accelerating house price growth while leaving units behind.

4. Investor underperformance – Historically, units have underperformed compared to houses. This track record has influenced investor sentiment, pushing more capital into detached housing.

The Affordability Question

On average, units remain the cheaper option compared to houses. However, as Arjun highlighted, affordability alone doesn’t guarantee performance.

“Just because there’s a gap doesn’t mean it will fix,” he said. “In fact, the gap could even get bigger.”

Adding to this, some regional markets still offer houses at prices comparable to city units. For buyers, this means there are affordable alternatives outside capital cities, with the potential for stronger growth.

Key Insights for Buyers and Investors

Arjun also shared practical takeaways for anyone considering units:

• Don’t rush strata decisions.

• Always check for building defects.

• Build a trusted team of professionals.

• Avoid costly mistakes by doing thorough due diligence.
  
  
  

What It Means Going Forward

The record divide between houses and units reflects both market dynamics and buyer psychology. Units may remain more affordable, but price gaps are not guaranteed to close — and could expand further in select areas. For buyers and investors, the opportunity lies in being selective, doing the research, and understanding where the risks and rewards really are.

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At InvestorKit, our focus is on data, not hype. Understanding these trends helps investors make smarter property decisions.