Higher interest rates are putting pressure on the affordability of homes and encouraging buyers to look for cheaper options.
Buyers may be turning to units as houses become increasingly unaffordable, resulting in unit price growth in some areas significantly outpacing price growth of houses.
According to PropTrack’s June Home Price Index, unit prices grew by 6.7% over the year and were unchanged over the month. This was higher than houses which recorded annual growth of 5.6% and a monthly decline of 0.4%.
Further analysis shows that cumulative price growth of units has been greater than for houses since January 2025 (9.9% vs 9.6%).
With new house and unit listings up by 6.3% and 6.9% respectively in the six months to June 2026 compared with the same period to June 2025, supply has risen by a similar amount across both segments which suggests that these price growth trends are likely to be demand-driven.
Search behaviour on realestate.com.au points to a similar trend. In late 2020, searches for units made up less than 30% of total buy searches but over the past five years, the share of unit searches has risen and has consistently hovered around 37-39% between 2021-24. Since late 2025, it has lifted again reflecting what appears to be a recent increase in demand for units.
One of the main factors underpinning demand for units and their stronger price gains is the relative affordability compared to houses. At a national level, a the median house price is $1,001,000 while a typical unit is priced at $735,000. This amounts to a significant difference of $266,000.
Although, in some areas of Australia, home prices have declined in recent months, values are still near their peak and well above pre-pandemic levels. According to the PropTrack’s Housing Affordability report, the median household could only afford to repay loans on just 15% of properties in 2025. As houses tend to cost more, a rising proportion of buyers are being priced out which is increasing the popularity of units.
While this has contributed units outperforming houses as a whole, in some areas, the gap between unit and house price changes is considerably wider.
The Murray River – Swan Hill, Boroondara and Mildura regions in Victoria were among those with the largest difference in price growth between units and houses. Units respectively grew by 13.6, 12.5 and 12 percentage points more than houses since June 2025.
Brisbane Inner, Brisbane Inner – West and and Beaudesert topped the list of Brisbane regions where units are leading houses on annual price change. Over the past year, units grew between 15-28% which was more than double the growth of houses seen in all these regions.
In South Australia, the widest gaps between house and unit price growth were in the Port Adelaide – West, Prospect – Walkerville and Marion regions. Unit growth was 12.6, 12.4 and 7.4 percentage points higher respectively, than houses in these areas.
Units in South Perth, Cottesloe – Claremont and Belmont – Victoria Park outperformed houses by the largest margin in Western Australia. Units exceeded house price increases by 8.7, 5.9 and 5.2 percentage points, respectively.
What’s next for units?
The latest Consumer Price Index (CPI) figures show inflation remains above the 2-3% target set by the RBA which is increasing the likelihood of a rate hike in upcoming months. In the event of a rate hike, reduced borrowing capacity would further strain housing affordability, potentially increasing the share of buyers opting for units.
If this were to happen, units may continue to outperform houses, with the gap likely to widen in regions where house prices are becoming more out of reach.
