Apartment living in Australia on the rise as two-thirds choose location over size
19 November 2024
The majority of Australian home buyers would choose location over size and opt for apartment living.
Close to two-thirds (64%) of Australian home buyers say they would choose apartment living to afford their preferred location, according to Great Southern Bank research.
Among current homeowners, those who were in the market to upsize – like families - were the most likely to compromise on a standalone dwelling to buy in their preferred location (72%). They were followed by first-home buyers (65%) and downsizers (55%), who were slightly less willing to pivot from the traditional “Australian dream” of owning a house.
All generations from Gen Z to Baby Boomers rated apartment living a preferred option over other strategies like buying a ‘renovator’s delight’ (54%), buying in a less appealing suburb (43%) or rentvesting (41%).
The findings come as the price gap continues to widen between houses and apartments across Australia. Domain’s latest House Price Report found that Perth and Sydney have the most significant gaps, with the median house price in those cities around double that of the median apartment price.
At the same time, increases in the weekly rental asking price for apartments are outpacing houses, rising by a combined 20% across the Australian capitals (Domain Rent Report).
Great Southern Bank Head of Branches and Broker Mat Patterson said apartments may also be appealing, particularly for first homebuyers, because they were more likely to meet eligibility criteria for the Federal Government’s Home Guarantee Scheme.
“There are a range of state and federal government initiatives that allow eligible homebuyers to save on upfront costs, including stamp duty or purchasing lenders’ mortgage insurance with as little as a 5% deposit. However these schemes have price caps and other eligibility requirements that mean apartments are often a more viable option for those wanting to access this government support,” Mr Patterson said.
“And it’s not only first-home buyers that are willing to choose apartment living. We are seeing interest from customers of all ages and at different stages of life. The willingness by upsizers to consider apartment living suggests we will see more Australian families open to spacious apartment living into the future.”
Outer growth suburbs come with higher household running costs
SGS Economics and Planning research commissioned by Great Southern Bank in 2023 showed the ongoing costs of a two- or three-bedroom house in a growth area on Melbourne’s urban fringe could respectively be 27 per cent and 38 per cent higher than a 2-bedroom inner city apartment.
Once ongoing living expenses - such as higher energy bills, fuel and public transport – are added to mortgage payments, owners of a two-bedroom house in Melbourne’s outer suburbs could be spending $11,500 more each year than those who purchase a two-bedroom apartment in an inner-ring suburb.
“When homebuyers are weighing up options, it’s worth factoring in potential costs of home ownership over the next three, five, or 10 years, not just the upfront purchase costs,” Great Southern Bank Chief Customer Officer Megan Keleher said.
“The property location and size of the home can impact ongoing living expenses, including energy and water bills and transport costs. These factors are becoming even more important for homeowners looking to balance cost of living pressures.”