The $12 Trillion Milestone: Understanding Australia's Record Property Wealth Divide Between Houses and Units

Australia's property market has achieved a staggering milestone that few could have predicted a decade ago. The total value of residential real estate now exceeds $12 trillion, having doubled in just ten years. Yet beneath this headline figure lies a more nuanced story: the growing chasm between house and unit values that is reshaping how Australians approach property ownership.

At the end of October 2025, the premium for a detached house over a unit in Australia's combined capital cities reached approximately $363,000, representing a record 49.9% of the median unit value. This dramatic widening from just 20% five years ago has profound implications for first home buyers, investors, and anyone navigating today's property market.

Australia's $12 Trillion Property Market: The Numbers Behind the Milestone

A Decade of Remarkable Growth

The Australian residential property market crossing the $12 trillion threshold marks an extraordinary period of wealth creation. To put this into perspective, Australia's housing stock is now worth 2.8 times the total value of superannuation assets held by all Australians combined.

This milestone was reached faster than industry analysts anticipated, driven by a sharp acceleration in values during October 2025 when national home values rose 1.1%, the strongest monthly gain since June 2023. The combination of interest rate cuts earlier in the year and persistent supply shortages has fuelled momentum across most markets.

Current Median Values at a Glance

The latest Cotality (formerly CoreLogic) data reveals the current state of Australia's property values:

Capital City Medians (December 2025):

National Medians:

• Houses nationwide: $966,313
• Units nationwide: $722,399
• Combined capitals median house: $1,091,000
• Combined capitals median unit: $728,000

The Widening Gap: Why Houses Are Leaving Units Behind

Land Value: The Fundamental Driver

According to Cotality economist Kaytlin Ezzy, the persistent outperformance of houses over units comes down to one fundamental factor: land.

"Houses have always seen stronger uplift than units in the long term because of the associated land value," Ezzy explains. "This price sensitivity appears to have blown out through the strong growth cycle over the past five years."

When you purchase a house, you're buying both a dwelling and land. As land becomes increasingly scarce in desirable locations, its value appreciates independently of the structure built upon it. Units, by contrast, represent a share of land divided among multiple owners, diluting this appreciation effect.

The Five Year Transformation

The acceleration of the house price premium from 20% to nearly 50% over five years represents one of the most significant structural shifts in Australian property history. Several factors have contributed to this divergence:

Pandemic Preferences: The COVID era triggered a fundamental reassessment of housing needs. Working from home arrangements increased demand for larger properties with dedicated office space, backyards, and separation from neighbours.

Supply Dynamics: House construction faces more significant constraints than unit development. Land availability in established suburbs is finite, while apartment developments can add density vertically. This supply imbalance naturally favours house price growth.

Investor Behaviour: Property investors have increasingly favoured houses for their superior long term capital growth, even when rental yields on units may be higher. This investment thesis becomes self reinforcing as the data confirms the trend.

Performance Comparison: Recent Data

Over the three months to October 2025, houses appreciated 3.1% compared to just 2.3% for units across the combined capitals. This performance gap has persisted through most of 2025, with houses consistently outpacing apartment growth in the majority of markets.

City by City Analysis: Where the Gap Matters Most

Sydney: The Greatest Divide

Sydney presents the most extreme house unit divide in the nation, with detached homes commanding a 77.8% premium over apartments. The median house price of $1,584,125 sits nearly $700,000 above the median unit at approximately $891,000.

For Sydney buyers, this reality shapes fundamental purchasing decisions. A family seeking a house in the metropolitan area must now budget for a median price approaching $1.6 million, while the same family could potentially enter the market with a well located unit for considerably less.

Sydney property values have increased 37.4% over the past five years, with houses driving the majority of this growth. However, apartment price growth has outpaced houses in almost a quarter of Sydney suburbs examined by Cotality, suggesting pockets of opportunity exist for astute buyers.

Melbourne: Underperformance Creates Opportunity

Melbourne stands out as the weakest performing major capital, with property values rising just 16.6% over five years, significantly lagging Brisbane's 85.4% and Perth's 87.2% gains. The median house price of $978,392 and unit median of $637,830 represent a 53.4% premium.

This relative underperformance, combined with the challenges outlined in our analysis of mortgage stress hotspots, has created a two speed market. While established inner suburbs maintain their value, outer growth corridors have faced pressure from rising interest rates and employment challenges.

For buyers, Melbourne's current conditions may represent a strategic entry point. Domain forecasts Melbourne to outperform other capitals in the coming financial year, with unit growth of 7.1% predicted for 2026.

Brisbane and Perth: The Growth Leaders

Brisbane and Perth have been Australia's standout performers, with property values surging 85.4% and 87.2% respectively over five years.

Brisbane's median house price of $1,111,431 has now exceeded $1.1 million, while units sit at $792,896. The unit segment has shown particular strength, with median unit values up approximately 12.4% year on year, outpacing many house markets.

Perth recorded the strongest monthly growth among capitals at 2.4% in November 2025, driven by extreme supply scarcity with advertised stock levels tracking 45% below the five year average. Perth's median house value recently rose above Adelaide's for the first time since July 2018, signalling a fundamental market shift.

Adelaide: Sustained Strength

Adelaide continues its remarkable run with values up 79.1% over five years. The median house at $948,328 and unit at $651,039 reflect a 45.7% premium, slightly below the national average.

The South Australian capital benefits from relative affordability compared to eastern seaboard cities, attracting interstate migrants and maintaining strong demand despite rising prices.

The Strategic Case for Units in 2025

Forecast Reversal: Units to Outperform

While houses have dominated recent performance, emerging forecasts suggest a potential shift. According to the KPMG Property Market Outlook, unit prices are anticipated to rise by 4.5% in 2025, outpacing projected house price growth of 3.3%.

The outlook is even more optimistic for 2026, with KPMG projecting unit price increases of 5.5%, particularly strong in Melbourne (7.1%) and Sydney (6.1%).

KPMG chief economist Dr Brendan Rynne explained the shift: "Affordability is now getting worse," driving increasing demand for units as the only viable entry point for many buyers.

Where Units Offer Value

For buyers considering the unit versus house decision, several markets stand out for unit investment potential:

Strongest 2025 Growth Predictions:

• Sydney and Perth: 5% unit growth forecast
• Darwin: 3.8% unit growth forecast
• Melbourne: Positioned for 7.1% growth in 2026

Markets with Smallest House Premium:

• Hobart: 31.6% premium (lowest among capitals)
• Brisbane: 40.2% premium
• Adelaide and Perth: Approximately 45% premium

The Changing Unit Buyer Profile

The unit market is experiencing a demographic shift that strengthens demand fundamentals. Historically, younger buyers and investors dominated apartment purchases. However, downsizers are now playing a more active role in the market, creating demand across the age spectrum.

This diversification of buyer profiles supports unit values by broadening the potential purchaser pool and reducing reliance on any single demographic segment. For those considering downsizing, understanding how baby boomers are creating opportunities in the market provides valuable context.

What This Means for Different Buyer Types

First Home Buyers: Strategic Entry Points

With the median house in combined capitals now exceeding $1 million, many first home buyers face a stark choice: stretch finances to dangerous levels for a house, or enter the market through a well chosen unit.

The unit pathway offers several advantages:

Lower Deposit Requirements: A 20% deposit on a $728,000 median unit requires approximately $145,600 compared to $218,200 for the median house. For those using low deposit strategies with mortgage brokers, the savings are proportionally similar.

Reduced Mortgage Stress: Lower purchase prices translate to smaller loans and reduced repayment pressure. This matters significantly in an environment where first home buyer participation has been declining.

Location Advantages: Units often provide access to better located suburbs than houses at the same price point. A buyer might choose between a unit in an established inner suburb or a house in a distant growth corridor.

For first home buyers weighing their options, connecting with a buyer's agent through GoMatch can provide clarity on which approach best suits individual circumstances.

Investors: Yield Versus Growth

The house unit divide creates an interesting dilemma for property investors. Houses typically deliver superior capital growth, as recent data confirms. However, units often provide higher rental yields due to their lower purchase prices.

Current Rental Dynamics: Rental growth has picked up pace in 2025, with the March quarter increase largely driven by units, which rose 2.3% nationally compared with 1.4% for house rents. This reverses a recent trend where houses consistently outperformed in rental growth.

Looking ahead, median apartment rents are projected to grow by 24% between 2025 and 2030 across Australian capital cities, according to international property consultancy CBRE.

For investors prioritising cash flow, units may offer advantages in the current environment. For those focused on long term wealth building through capital appreciation, houses retain their historical edge.

Downsizers: Unlocking Equity

The widening gap between houses and units creates significant opportunities for downsizers. Selling a family home at current median prices and purchasing a quality unit can unlock substantial capital while maintaining lifestyle standards.

A Sydney couple selling their median priced house at $1,584,125 and purchasing a median unit at $891,000 would unlock approximately $693,000 in equity (before transaction costs). This capital could supplement retirement savings, fund lifestyle goals, or provide an inheritance for children.

Geographic Shifts in Property Wealth

Victoria's Declining Market Share

One notable trend within the $12 trillion milestone is the geographic redistribution of property wealth. Victoria's share of total housing market value has dropped from 29% five years ago to less than 25% currently.

This decline reflects Melbourne's underperformance relative to other capitals, as property wealth has shifted toward the stronger performing markets of Queensland, South Australia, and Western Australia.

For investors considering where to deploy capital, these shifts signal changing fundamentals that may persist. Markets gaining wealth share often benefit from self reinforcing dynamics as increased equity enables further investment and spending.

Regional Market Dynamics

While this analysis focuses on capital cities, regional markets have played a significant role in Australia's property wealth accumulation. Regional dwelling values rose 6.0% annually, with Regional Western Australia (+16.1%), South Australia (+12.5%), and Queensland (+10.5%) leading growth.

The regional renaissance driven by remote work continues to influence both houses and units in regional centres, though the house premium typically remains lower in regional areas due to greater land availability.

Making Strategic Decisions in a Divided Market

Key Considerations for 2025 Buyers

Assess Your Timeline: If you're planning a five to ten year hold, consider whether forecast unit outperformance might narrow the gap. Short term decisions might favour the currently stronger house market momentum.

Prioritise Location: Within the house unit decision, location quality often matters more than property type. A well located unit may outperform a poorly located house over the long term.

Factor in Lifestyle: Beyond investment considerations, honestly assess your lifestyle needs. Units offer lower maintenance and often better location, while houses provide space, privacy, and land ownership.

Understand Strata: Unit ownership involves strata fees and collective decision making. For NSW buyers, understanding recent strata law reforms is essential before purchasing.

Working with Professionals

The complexity of today's market makes professional guidance more valuable than ever. A qualified buyer's agent can analyse local market dynamics, identify properties offering value within the house unit spectrum, and negotiate effectively on your behalf.

Similarly, working with an experienced mortgage broker ensures you understand your borrowing capacity for different property types and can structure finance appropriately.

Conclusion

Australia's $12 trillion property market milestone represents remarkable wealth creation, but the record $363,000 gap between house and unit values signals a market increasingly divided along property type lines.

For buyers, this divide demands strategic thinking. Houses continue outperforming in capital growth terms, driven by land scarcity and persistent demand. Yet units offer more accessible entry points and forecasts suggest potential outperformance ahead as affordability pressures intensify.

The right choice depends on individual circumstances: financial capacity, lifestyle needs, investment timeline, and risk tolerance. What's clear is that dismissing either property type categorically means missing opportunities in Australia's dynamic market.

As the gap between houses and units reaches unprecedented levels, understanding this divide becomes essential knowledge for anyone participating in Australian property. Whether you choose the traditional path to house ownership or the strategic unit approach, informed decision making based on current market realities offers the best foundation for property success.

Sources

1. Cotality (formerly CoreLogic) Home Value Index, November 2025
2. The Urban Developer, "Property Market Passes $12 Trillion as Home Values Soar," November 2025
3. Mortgage Professional Australia, "House Price Gap Widens as Property Market Surpasses $12trn," November 2025
4. KPMG Property Market Outlook, 2025
5. Your Mortgage, "Latest House and Unit Prices Across Australia," December 2025
6. PropertyUpdate.com.au, "Everything You Need to Know About Australia's Property Markets," November 2025
7. Domain Property Price Forecasts, 2025
8. CBRE, "Australian Rental Market Projections 2025 to 2030"