Unit value declines in capital cities and regions

According to CoreLogic’s national unit index, it has been recorded that there has been a decline in unit values, where over the last four months, there was a -2.3% decrease, being approximately $14,400. This decline is predominantly within the combined capitals cities, declining by -2.7%. In contrast, the regions decline has been more stable, only declining by -1.3%.

This period of downswing is now the fasted decline in unit values witnessed in 40 years, exceeding the pace recorded during the Global Financial Crises. However, as reminded by CoreLogic economist Kaytlin Ezzy, “It’s important to remember to the context of the past two years”. Although the unit values increased by 0.5% within capital cities in a year, these levels are now 7.7% above “pre-COVID levels”.

The annual performance gap between houses and units has decrease from 12.3% in September 2021 to 2.2% in August 2022. Similarly, the national performance gap has decreases from 10.9% to 3.0% in the period indicated above.

Capital Cities:

This decline in unit values was most impacted in Sydney (-1.5%) and Hobart (-1.7%), followed by Melbourne (-0.6%). These declining figures are affected by the rising cost of living, alongside increasing interest rates, which place great pressure on property demand. Furthermore, the normalization of unit listing levels in Canberra has also placed pressure on the decline on values and Brisbane’s listing levels have slightly increased by 6.5%. Adelaide’s increasing monthly growth has fallen off by 0.9% in the last quarter recorded which is also similarly being experienced by the market in Perth.  

Regions:

The only market within regional Australia who has experienced an increase in monthly unit values was Western Australia (0.2%). Kaytlin Ezzy states that “Listings continue to be an important factor affecting values… If a rise in listings isn’t met with a subsequent rise in demand… it would add additional downward pressure on values”.