Unit values up $5k in 1Q22

At the national level, units recorded a 0.3 per cent rise in values over March, resulting in a first-quarter appreciation of 0.9 per cent, an increase of more than $5,000 for median unit values, while the median value of house values rose $21,690 in the quarter, data revealed.

The data, published in CoreLogic’s monthly unit market update, revealed the annual performance gap between houses and units fell to 8.7 per cent in March as both markets slipped further from their peak rate of growth recorded in January.

Research analyst Kaytlin Ezzy, at CoreLogic, said while national houses are still recording stronger value growth compared to units, houses have also recorded a faster deceleration in the pace of quarterly growth.

“Since reaching a cyclical peak in May 2021, the pace of quarterly house growth has recorded a 4.9 percentage point fall, compared to a 3.8 percentage point fall for unit quarterly growth,” Ms Ezzy said.

“Similarly, the slowdown in values can be seen in the annual growth trend, with both houses and units moving into a downswing trend after recording cyclical peaks in January.”

While market conditions may have softened, the report found house growth continued to rise 0.5 per cent across the combined capital cities, with unit price growth flattening.

The report found unit values across the more expensive cities are beginning to record quarterly declines with Sydney down 0.6 per cent, Melbourne down 0.2 per cent, while “relatively cheap” cities like Brisbane and Adelaide are still recording quarterly growth above 4 per cent.

To compare unit prices across major cities, Sydney’s median unit value is $833,815, making it approximately $355,000 more than the typical Brisbane unit, and more than double the price of the average Adelaide unit.

At the suburb level, more than 50 per cent of Sydney’s unit markets analysed recorded a decline in values over the first quarter, with a number of the largest falls recorded in the city’s Northern Beaches region.

Similarly across Melbourne, 58 per cent of the units analysed saw a decline in value, with the largest declines recorded across the inner-city markets.

Brisbane continued to be the standout performer among the capital city unit markets, recording a new cyclical high in monthly 1.6 per cent, taking its annual growth rate up 15.1 per cent, a rise of $63,000 over the past 12 months.

While Adelaide units continued to record strong monthly growth rates, the pace of quarterly growth slowed from 4.4 per cent in January to 4.2 per cent over the three months to March.

Out west, Perth recorded a “surprise reversal” with unit values up 0.7 per cent over the three months to March.

Across Hobart, Darwin and Canberra, the pace of growth continued to ease over March, while quarterly growth has remained positive.

Regional markets show resilience

Indeed, regional markets continued to see a slight appreciation in March of 1.7 per cent, with each “rest of state” market recording positive unit value growth over the quarter.

Regional Queensland continued to lead the pace of growth, recording a quarterly unit value increase of 5.9 per cent, followed by regional Western Australia
up 4.3 per cent, regional Victoria saw an increase of 3.8 per cent and regional NSW up 3.6 per cent.

But it wasn’t the same highs across the country, with regional South Australian units recording the smallest increase in values up 0.5 per cent over the quarter, and regional Tasmania rose by 1.7 per cent.

Inflation and affordability real concerns

With inflation hitting its highest level in 22 years, now marking 5.1 per cent, the report said rising cost of living will keep prospective buyers back.

“Prospective buyers are finding it harder to save for a deposit, while the amount required for a deposit has also increased,” Ms Ezzy said.

“Assuming a 20 per cent deposit level, the average house deposit has increased by approximately $36,000 over the past two years, while the typical unit deposit has increased by around $15,000.”

While Bluestone’s affordability index showed signs of slowing, CoreLogic’s report stated “affordability continues to be a key factor affecting market conditions.”

It said investment in higher density dwellings has a significant role to play in alleviating affordability concerns.

Looking forward, Ms Ezzy said appreciation of property values is seeing more headwinds than tailwinds, although units may be more resilient.

“Unit capital growth cycles have historically seen less volatility than houses, and as a result the downswing in prices is expected to be less than that in the detached house segment,” Ms Ezzy said.

[Related: House and unit values widen to record disparity: CoreLogic]

Kate Aubrey is the senior content producer of Momentum Media's mortgages titles: The Adviser and Mortgage Business.

Prior to joining Momentum Media, Kate covered regional and breaking news for ABC Radio for more than three years.

She has a Master of Arts in Journalism from the University of Melbourne and a Bachelor of International Business and Business Management from Griffith University.

Email Kate at: This email address is being protected from spambots. You need JavaScript enabled to view it.