Extract from a recent article by Tim Lawless from RP Data:
"Another recent trend has been the superior performance of the unit market relative to houses. Over the first five years [2001 to 2005] average annual growth was recorded at 8.7% for houses and 6.2% for units, over the last five years [2006 to 2011] the figures have been 4.4% pa and 5.5% pa respectively. The results reflect the fact that affordability has become an issue and people are focusing on cheaper housing options. The results also reflect changing lifestyle patterns and a greater acceptance of unit living, particularly within inner city areas of our major capital cities.
If recent market conditions are anything to go by, the residential housing market is likely to show lower levels of capital gains in the coming years compared to the longer-term historical trend. It is important to note that historically housing has been a long-term asset class which has appreciated at a slow pace over a long period of time. In recent years big spikes in growth rates have seen people more prepared to speculate on short-term value growth. Given the recent data it looks as if the housing market fundamentals are reverting to "normal" market conditions after a period of higher than normal growth rates."