Why Australians Prefer Houses Over Apartments

*Australia Property Playbook, by Sam*

A garden, a garage, and a “three-sided” freestanding position are the basic housing expectations of most Australians, which is why most people choose to buy a detached house to live in. The Australian Bureau of Statistics’ 2021 Census of Population and Housing found that 70% of Australian households nationwide live in a detached house.

Of that 70% living in detached houses, 76% own their home outright or are still paying it off, a higher owner-occupier rate than for medium-density housing such as terraced houses or high-density housing such as apartments, at roughly 44% and 32% respectively. This shows that Australians’ clear first choice for their own home is a detached house, which is also why both the new-build and resale markets for detached houses are more active than for the other two types, while apartments are more often bought as rental investments. There are many reasons detached houses are popular; the author shares five of them here.

• 70% of Australian households nationwide live in a detached house.
• 76% of detached-house households own their home; 47% of terraced-house households own their home; only 34% of apartment households own their home.

A Detached House Can Add Living Space or Earn Passive Income

The previous article touched on Australia’s housing crisis, and different state governments are looking for ways to increase housing supply. In Victoria, for example, owners do not need council approval to add a granny flat of up to 600 square feet. A granny flat typically costs between AUD 100,000 and 150,000 to build, and at a current average rent of about AUD 300 a week, an owner can earn about AUD 15,000 a year in extra income — a return of about 15%.

• The smaller building on the left in the photo is a granny flat.
• It gives the owner extra living space or rental income, which is why such listings are more popular than comparable detached houses without one.

A Detached House Is Not Bound by the New Rule Requiring Electric Cooking Instead of Gas

For Chinese communities that have always loved cooking over an open flame, no gas cooking would be a nightmare. In September 2023, the Victorian government announced that from 2024, new residential builds must use electricity instead of natural gas. Building an apartment or a subdivided residential project (Residential Subdivision) requires a Planning Permit beforehand, and that permit sets out the relevant conditions. The new measure aims to reduce gas use for environmental reasons, while also helping owners save on construction and living costs. Because building a detached house does not require a Planning Permit, it is not affected by the new rule, so gas can still be used.

• Internet personality Uncle Roger has argued that cooking over an open flame is essential, joking that anyone who uses an induction cooktop doesn’t understand real cooking.

A Detached House Tracks Closer to Market Value

When the author worked in a surveying firm’s capital markets division, investors would always ask for “comparable sales data.” Whether for rent or for a sale, investors want to know the market value of the property they’re buying, so they can pay a fair price and use a reasonable valuation to apply for a mortgage. In the Australian market, a newly built detached house tracks closer to resale-market prices than other project types. The main reason is that with construction costs continually rising, whether a valuer uses the market approach or the cost approach, the numbers come out close together, so the premium is smaller — meaning less risk of “overpaying.”

• Crowds gather at an auction; detached houses are actively bought and sold.

The Future Value of the Land Is Effectively Unlimited

Similarly, an experienced investor will always ask about the number of separate titles. As most properties in Hong Kong are held under strata title, investors want to know whether they have enough ownership rights to redevelop or change the use of a property in order to capture greater value. In Australia, some investors focus on lots of 6,000 to 8,000 square feet or larger. Once the local population grows to a certain level, the owner of a detached house can apply to the local council to redevelop it into medium- or high-density housing. Even without a change of land use, the owner may still benefit as surrounding lots receive development approval and rise in value — a rising tide lifts all boats.

• Some listings advertise that the council has already approved redevelopment of the land into several terraced houses, and are priced higher than comparable listings.
• The detached house pictured sold on 9 December 2023 for 10–15% above comparable sales in the area.

Building Your Own One-of-a-Kind Dream House

Whether you buy new or resale, the existing design often isn’t quite right; building your own detached house lets you change the design yourself and create the Dream House you actually want. Anyone who has lived in a detached house in Australia will recognize the following issues: first, in a traditional detached house the main bedroom and the front door both face the street, and most houses have no front fence, giving low privacy; second, some bathrooms have no basin, so you have to go to another room to wash your hands after using the toilet; third, range hoods often perform poorly, leaving cooking odors that are hard to clear.

Building your own detached house lets you design every inch of space with care, and some people even build a “void” living room with double-height ceilings up to the second floor for a grand effect. Very few locals do this, though, because a void wastes floor area and, over the long run, uses more energy, adding to household running costs.

• Building your own detached house lets you change the design to suit your preferences.

Detached houses have plenty of advantages, but the author should note in closing that they also have real drawbacks — higher maintenance costs, higher energy use, lower rental yields, a garden that takes time and effort to maintain, and no shared building facilities, among others. Even so, weighing the pros and cons, the unique advantages of a detached house are hard to give up, and it looks set to remain Australians’ first choice of home.

If you have questions about buying property in Australia, ask Zagdim.

Sam Chan, Market Development Manager (Hong Kong), MAC Builders

Sam holds a Bachelor’s degree in International Studies and a Master’s degree in Construction and Real Estate from City University of Hong Kong and The Hong Kong Polytechnic University. He previously worked at Ray White, Australia’s largest real estate agency, in the Capital Markets & Investment division of Colliers International, and at the investment publication *Asian Private Banker*. He is now based in Australia, where he tracks local property and housing demand first-hand to support partners on the ground.

MAC Builders is one of Melbourne’s fastest-growing builders and one of the few with Hong Kong-background management, offering considerate and flexible products. Internal data shows MAC Builders has become one of the most-used builders among Hong Kong clients.

Have a question about this guide? Leave a comment below, or ask Zagdim directly.