More concerning than the thousands of reported defects for high-rise property is the lower growth rate of apartments when compared with houses, new research has revealed.
According to Propertyology, the financial performance of high-density apartment in every Australian city over the last decade has been “horrible”.
Managing director and property analyst at Propertyology Simon Pressley believes investors are taking on increasing risk when they buy apartments.
“Each and every year that an individual city’s housing market performs sluggishly, the risk of high-rise apartment value decline significantly increases,” Mr Pressley explained.
This is on top of owners of high-rise apartments in the last two decades having structural problems.
“For a variety of reasons, Propertyology is very concerned for all owners of high-rise apartment that were built in the last 20 years,” the property expert said.
“One such concern is the enormous repair bill for major structural defects – several highly publicised buildings being just the tip of the iceberg,” Mr Pressley continued.
When compared directly to its own city’s performance of detached house prices, Melbourne’s house high-rise property market have performed significantly worse than every other Australian city.
In dollar terms,as an example, the median house price increased from $540,000 to $950,000, compared with apartments which have gone from $400,000 to $513,000.
In the nation’s capital, 62 per cent of all new dwellings approved over the last 16 years were apartment and townhouses.
Over the 10-year period ending May 2019, Canberra’s median house prices increased by 46 per cent.
The median apartment price increases were below 20 per cent in 25 individual Canberra suburbs.
Brisbane’s year-after-year modest price growth for all of the last decade has accumulated a 36 per cent increase in Greater Brisbane’s median house prices.
In Brisbane, 20 of its suburbs found to have weaker growth compared with houses.
The harbour city, over the 10 years ending May 2019, has seen a 100 per cent increase for houses in the greater city. However, most of this growth can be attributed to the boom ending July 2017.
An increase in apartment construction in recent years has led to a 25 per cent increase in apartment prices, only a quarter of the growth houses have had.
The findings also showed that there are thousands of Sydney apartments that are worth significantly less today than four or five years ago.
While the last decade has been lean for the west coast, Greater Perth’s median detached house price still grew by 19 per cent.
Twenty-two Perth suburbs produced between zero and 32 per cent decline in median apartment value over the last decade.
Running parallel to Brisbane over the last 10 years, Greater Adelaide median house price increased by 31 per cent during the decade ending May 2019.
Apart from Adelaide’s city heart and surrounding suburbs, apartments are not prominent in Adelaide.
Comparison growth for Adelaide city houses are outperforming apartments by 19 per cent, with apartment growing by 12 per cent.
Darwin has suffered low growth over the past decade, growing by 14 per cent over the 10 years ending May 2019.
There are 10 suburbs in Darwin where median apartment prices are lower today than 10 years ago.