Units and houses both rise as buyers chase affordability

The Sydney property market is currently caught in a fascinating tug-of-war where nobody is backing down. For years, the conventional wisdom was simple: if you want capital growth, you buy a house on a block of land in the suburbs; if you want a lifestyle entry point, you settle for a unit. But the latest PropTrack figures indicate that the gap between the two is starting to blur as desperate buyers hunt for any semblance of affordability. House prices and apartment values are now rising at comparable clips, proving that the frantic search for a roof has reached a fever pitch.

In the harbour city, this trend is manifesting as a massive squeeze on the middle market. As the median house price in Sydney circles the $1.6 million mark, many would-be upgraders are finding themselves priced out of traditional family heartlands like Ryde or Marrickville. Instead of fleeing to the Central Coast or the Illawarra, these buyers are pivoting. They are staying urban but downsizing their expectations, opting for three-bedroom apartments or modern townhouses. This shift in demand is providing a significant lift to the unit sector, which has historically lagged behind detached dwellings.

Walk through any weekend inspection in Ashfield or Parramatta and you’ll see the same demographic mix: young professionals competing against downsizers who are cashing out of large family homes. This cross-generational competition is keeping prices buoyant even as interest rates remain stubbornly high. The unit market is no longer just the 'consolation prize' for those who can't afford a backyard in the Shire. It has become a strategic move for those who value proximity to the T1 Western Line or the Metro over the maintenance of a quarter-acre block.

The growth isn't just confined to the inner ring either. Western Sydney is seeing a notable surge as infrastructure projects, such as the upcoming Western Sydney Airport and the revitalisation of Blacktown’s CBD, make apartment living more attractive. Buyers who might have looked at a fibro cottage in the far west five years ago are now looking at high-spec apartments in transit-oriented developments. It’s a pragmatic response to a market that has become increasingly unforgiving to those without a massive deposit or a leg-up from the Bank of Mum and Dad.

For investors, this synchronised growth between houses and units is a signal that the rental crisis is continuing to bake value into the market. With vacancy rates sitting at historic lows across Sydney, the yield on apartments is becoming harder to ignore. When you factor in the soaring costs of building new homes—which has hampered the supply of new houses—the existing unit stock looks like a safer bet for those looking to get their foot on the property ladder before the next inevitable price hike.

As we head toward the tail end of the year, the big question is whether this dual-speed growth can sustain its momentum. While the breakneck speed of the post-pandemic boom has tempered, the fundamental lack of stock remains Sydney’s greatest price driver. Whether it's a terrace in Paddington or a contemporary flat in Macquarie Park, the appetite for Sydney dirt—or at least a slice of the sky above it—shows no signs of slowing down just yet. Anticipation for a potential rate cut in 2025 is already starting to bake into current bidding wars.