How are Australian unit prices faring in 2022?

Australian unit values have held strong throughout the year but may be finally giving in to the market conditions that have caused house prices to tumble in recent months, according to CoreLogic.

In the capitals, where units comprise 78.3 per cent of Australia’s unit supply, unit values have fallen 2.7 per cent since April — a decrease in value of around $17,500.

Regional units have been fairly resilient in comparison, falling just 1.3 per cent since peaking in June this year. This represents a decline in value of around $7,000.

In August, Hobart and Sydney recorded the steepest declines among capital cities, falling 1.7 per cent and 1.5 per cent, respectively. Melbourne unit values also fell by 0.6 per cent over the month.

The downturn has caused annual growth rates in Sydney and Melbourne unit markets to dip below zero for the first time since February 2021. Sydney has seen a cumulative decline of 2.5 per cent, while Melbourne has recorded a decline of 0.6 per cent.

Change in unit values in August (CoreLogic)

CoreLogic Economist Kaytlin Ezzy said the current downturn, driven by a combination of rate hikes, poor sentiment and reduced lending capacity, has seen prices falling at the fastest rate in 40 years.

“While Australia’s unit market has been somewhat more resilient to falling values than the detached housing segment, it has not been immune, with many households being sensitive to increased interest rates due to high debt levels along with high inflation.”

This has narrowed the annual performance gap between capital city houses and units from 12.3 per cent in September 2021 to 2.2 per cent in August 2022. Nationally, the gap fell from 10.9 per cent to 3 per cent over the same period.

But Ezzy points out that the recent dip in unit values should be viewed in light of the significant gains the market saw over the pandemic period.

“Despite the current decline being the fastest on record, it’s important to remember the context of the past two years. While capital city unit values are just 0.5 per cent higher than this time last year, they are still 7.7 per cent above pre-COVID levels,” she said.

And not all markets have followed Sydney and Melbourne in tumbling down. Adelaide unit prices were up 1.1 per cent over the month, while Perth and Darwin units grew 0.4 per cent and 0.6 per cent, respectively.

Ezzy notes that differences in listing numbers continue to be a major factor affecting prices.

“Limited supply across Adelaide has helped support value growth while above average listing levels in Sydney and Melbourne have contributed to skewing selling conditions in favour of buyers,” she said.

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