Home buyers in all capital cities would pay more for a two-bedroom house than a two-bedroom unit, except for Brisbane where it was $21,000 cheaper.
Perth had a difference of $85,000 between a two-bedroom house over a two-bedroom unit. Meanwhile, buyers paid just $10,000 less if they bought a three-bedroom unit instead of a three-bedroom house in Perth.
Sydney had the biggest difference of $180,000 between a two-bedroom house over a two-bedroom unit. But buyers paid $165,000 more if they bought a three-bedroom unit instead of a three-bedroom house in the harbour city.
It was a similar story in Melbourne where buyers paid a $145,000 premium for a two-bedroom house over a two-bedroom unit. But they would make a $40,000 saving if they opted for a three-bedroom unit over a three-bedroom house.
The Local Loan Company director Kylie Platt said there was still strong demand for bigger homes and rather than downsizing many may consider changing suburbs instead.
“Since COVID people are wanting to have a bigger home and yard so that they have space around them should we ever encounter a lockdown again,” she said.
Platt said she did not believe the full effect of rate rises had been felt.
“I anticipate that we will start to really see this flow through after Christmas,” she said.
“We may start to see people let go of services that they don’t think are necessary – but really would like to keep – such as having a cleaner, lawn mowing contractor, gym membership, nails done and eating out regularly as they try to cover off the increase in their mortgages and the cost of basic everyday living expenses.”
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PRD Real Estate’s chief economist Dr Diaswati Mardiasmo said younger households would look to make the compromise as the cost of living hit the highest levels in decades and mortgage rates increased at the fastest rate since the 1990s.
“When we look at the cost of living, mortgages are getting more expensive. You will start to see people thinking ‘Can we do away with less bedrooms or a different type of house?’” she said.
Mardiasmo said larger households with inelastic needs, such as more kids in need of separate bedrooms and who are enrolled in schools nearby, would have the least number of options to shop around.
Barry Plant director Mike McCarthy said the premium on two-bedroom houses in almost all capitals was due to their land value and potential to capitalise on the property, while the premium on three-bedroom units was due to high demand from cashed up downsizers and priced-out house buyers, said Mike McCarthy, director of Barry Plant.
“When you make the leap to a two-bedroom house, you’re going to be talking about a freestanding property on more land than a two-bedroom unit,” he said.
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