Fears Australian property facing affordability crisis as Sydney prices rise by $620 a day

There are fears some cities in Australia are facing a looming housing affordability crisis as property prices explode by almost a quarter in just 12 months.

According to data from property firm CoreLogic, Australian property values rose 20.3 per cent in the year to September 2021, with the pace of house prices far outstripping the growth of apartments.

So dramatic has the price hike been that on average, in the three months to September 2021 property prices in Sydney have risen by $620 a day - or $4340 a week.

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CoreLogic's Head of Research Australia Eliza Owen says soaring prices could be pushing first time buyers out of the market.

"Rapid growth in Australian housing values and rents over the past year has contributed to greater affordability pressures for households," Ms Owen wrote in a research note.

"ABS lending data shows first home buyer finance commitments have fallen -22.8 per cent since January 2021, and rising rent prices have created housing stress for tenants, particularly in parts of regional Australia."

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One segment of the market that has suffered the disparity between house and unit prices are Australians who are looking to sell their apartment to move into a free-standing home.

According to Ms Owen, recent unit sellers have struggled to upgrade their property despite soaring prices for vendors.

"The situation poses a particular barrier for those looking to upgrade from apartments to houses, with national house values increasing 22.9 per cent in the 12 months to September, compared to a 12.0 per cent lift in unit values," Ms Owen said.

"Similarly, the gap between median house and unit values continued to trend at record highs through September 2021, with typical capital city house values sitting 34.4 per cent higher than unit values."

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But there may be hope for those looking to leverage their apartment for a home – with COVID-19 restrictions easing and border rules scheduled to be relaxed, it's likely investor activity will return to the unit market.

"Looking forward, we could see unit purchases becoming more popular as demand is deflected away from houses simply due to affordability constraints becoming more pressing across the detached housing sector where values have risen substantially more than units," Ms Owen said.

"Also, with investment activity picking up, interest in medium to high density styles of housing could lift as investment demand has historically been skewed towards the unit sector."

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