Houses may have accounted for the lion’s share of property price growth in 2021, but a softening market and more demand for units is narrowing the property price divide.

In 2021 house prices increased 25.5% compared with 7.7% for units. CoreLogic data shows now that gap between house and unit prices is narrowing in most capital cities.

The premium for Sydney houses over units dropped by 2.2% in July, in Brisbane it dropped by 2.4% and Adelaide 2.2%.

Canberra recorded the most significant change of 5% while Melbourne had the smallest drop of just 0.6%.

CoreLogic economist Kaytlin Ezzy says as the property market moves toward a downward phase of the cycle, the gap between houses and units continues to narrow.

“While houses typically outperform units during the upswing of the cycle, they have also historically recorded larger declines through the downswing,” she says.

Low supply of new unit stock means unit values may continue to rise and the gap tighten further.