Unit values dropped nationwide across September

Since April, house prices have dropped 5.3 per cent, while their unit counterparts have felt drops of 3 per cent, with CoreLogic economist Kaytlin Ezzy predicting that as the downward phase of the cycle continues, it’s likely unit values will become more resilient to affordability constraints and rising interest rates.

Consecutive rate hikes and record-high household debt-to-income levels have seen the declines in national unit values — initially limited to the upper-quartile of the market in the initial period of decline — now spreading across all sectors of the market as the three-month growth rate for combined capital city units lists the middle market as having declined by 2.2 per cent, with the lower quartile experiencing a 0.4 per cent drop.

Across the capital cities, 70.8 per cent of the 982 unit market’s analysed by CoreLogic were reported as declining across the September quarter, nearly double the 39.8 per cent of markets in the June quarter.

In Hobart, 100 per cent of markets are experiencing a decline. While Sydney (95.7 per cent), Melbourne (88.4 per cent), and Canberra (85.1 per cent) also recorded substantial quarterly falls.

The most decline-resistant markets are Adelaide and Perth, where 11.6 per cent and 38.9 per cent of markets, respectively, reported a quarterly value decrease.

“Adelaide’s relative affordability, coupled with low advertised stock levels, has seen Adelaide’s unit market remain resilient to declining values,” Ms Ezzy said. “While monthly growth remains positive, the pace of growth has slowed significantly.”

She anticipated that “with further interest rate rises expected in the coming months, it’s likely Adelaide’s unit market will soon find its peak, before declining”. 

Despite falling throughout September, later cyclical peaks in Brisbane, Perth, and Darwin resulted in the trio recording respective quarterly value gains of 0.4 per cent, 0.6 per cent, and 1.4 per cent. 

On the contrary, Hobart’s monthly decline of 1.1 per cent saw unit values drop 0.1 per cent below levels reported this time last year. The Tasmanian capital joins Sydney (4.8 per cent) and Melbourne (1.6 per cent) as the capitals where values are below last year. 

Turning our attention to Australia’s regions, the unit market nationally fell 0.7 per cent in September, with only regional South Australia and Western Australia offering any resistance to the declines, rising 1.2 per cent and 1.3 per cent, respectively.

Ms Ezzy attributed a late start to spring selling season as a primary reason behind the national total advertised stock dropping 2.7 per cent below the five-year average over the four weeks to 2 October.

Rents leapt up 1.1 per cent in September, over double the 0.5 per cent recorded across national housing markets. Despite this, there are signs rental growth is beginning to plateau.