June 24, 2026 — 6:00amHouse prices have risen faster in a handful of Sydney neighbourhoods where a wave of high-rise apartment towers were built, compared with other suburbs with less apartment development, new research has found.A shortage of high-density housing is not the sole cause of booming house prices, the paper concludes.More medium-density housing could help improve housing affordability.Oscar ColmanIn recent years, increasing the supply of homes relative to demand has been proposed by experts and governments as a key solution to the affordability problem. The new research strongly supports the need for more supply but highlights the importance of delivering different types of housing, not only high-density homes.The paper by economic research group the e61 Institute, When Housing Supply Hits the Market: Apartment Presales And Sydney Price Trends, released on Wednesday, compares past apartment development with changes in house prices.Sydney house prices boomed 76 per cent between 2012 and 2017, then fell 11 per cent over the next two years. Apartment completions peaked in 2018-19, and the new supply was available to move into at the same time as prices were falling.But the research finds most of those apartments were sold years earlier off-the-plan, as presales peaked in 2014-15, during the price boom.“It makes it harder to argue all of this price growth was driven by shortages of high-density housing,” Dr Nick Garvin, research manager at the e61 Institute and author of the report, said.“We should consider the possibility that growth in housing supply of one type of housing has limited effects on other types of housing.“And the implication of that is that it would be beneficial to think about growing supply in a diverse way, so for example, more townhouses and medium-density apartments would be a way to lift density overall but grow the stock in a more diverse way.”Garvin looked at areas where many new apartments were supplied, and found they had lower apartment price growth, as expected.But detached house prices tended to rise more in areas with more apartment supply.In the suburbs where more than 1000 new apartments were built, the median detached house price rose 91 per cent from 2012 to 2017. But in the suburbs where under 100 new apartments were built, the median detached house price rose only 69 per cent during last decade’s property boom.“The areas where there was a very big amount of … apartments built, we still saw very strong house price growth, potentially stronger than in other areas,” Garvin said.“Demand to live in these areas generally was growing a lot and the new apartment supply was catering to that demand to the market for apartments, and that’s why apartment price growth was relatively low in those areas, because the new supply catered to the growing demand. But it didn’t satisfy the demand for houses.”Garvin emphasised that more supply of homes is needed as the population grows, or otherwise the housing affordability problem could get worse.“I wouldn’t say, go back and undo the apartments that were built. They were definitely a good thing,” he said.“What has been driving Sydney’s price growth? … It’s not just supply shortages.”Garvin said other policy responses to housing affordability were also worth looking at, such as the taxation treatment of owner-occupied housing compared to other asset classes.KPMG director of planning and infrastructure economics Terry Rawnsley, who was not involved in the research, agreed that medium density housing and townhouses could help improve housing affordability.He said they could be built for a lower price per square metre as they may not have a complicated site or amenities such as lifts or underground car parks. More developers and builders are capable of delivering them compared with high-rises.“There’s definitely a consumer preference that [some] people don’t like the high-rise living environment … other people, that’s where they were born, that’s where they grew up, and it’s perfectly reasonable for them to live there,” Rawnsley said.“The planning system should be about providing people with housing choice.”He acknowledged the responses in the recent federal budget to tackle housing affordability, including by changing the tax treatment of negatively geared investments and capital gains.“Pulling back that investor segment means there will be slower price growth which should over the long run help housing affordability,” he said, also noting the funding for infrastructure for new developments.Property listingsFrom our partners