CoreLogic’s national unit index increased 0.6% over March, rising for the first time in 11 months
25 April 2023 | CoreLogic release
Following last month’s flat result, March’s uptick took unit values just -0.4% lower over the quarter and saw the annual decline trend reduce from -5.6% over the 12 months to February to -5.3% over the year to March. The subtle increases seen in Sydney unit values in February became more geographically broad-based, with six of the eight capitals recording a monthly rise in unit values.
“It’s looking increasingly like we have moved through a trough in unit values, however a number of headwinds are still apparent, including further rate rises, an expectation for weaker economic activity through the year and the potential for a lift in advertised stock levels. However, as we move through a possible inflection point, it can be useful to compare the current unit downswing to both previous periods of value decline and to the cumulative value drops seen in the house market,” Ms Ezzy said.
In January, the cumulative decline in national dwelling values overtook the 2017-2019 downswing as the largest decline on record, with the trend in dwelling values pulled down by the -9.7% fall in house values seen through the first nine months of the downswing (increasing to a -9.9% decline over the first 10 months). By comparison, the -6.1% drop in national unit values between April 2022 and January 2023 was moderate relative to both the house value falls and to previous unit peak-to-trough declines.
Unlike the house and broader dwelling market, the decline seen in unit values since April 2022 is behind both the 1989-91 downswing (-8.3%) and 2017-19 drop (-7.0%) in terms of cumulative decline, and also behind 1989-91 in terms of speed. “If this month’s improvement in values isn’t a false start, it’s likely we won’t see much momentum in the recovery phase until a catalyst for a new growth phase becomes apparent. For example, a decrease in interest rates, renewed fiscal stimulus such as first home buyer incentives, or an easing in credit policies such as a reduction to APRA’s serviceability buffer could see an increase in housing demand.”
The shift to a more positive trend in unit values was geographically broad-based, with both the combined capitals (0.6%) and combined regional (0.2%) markets recording a monthly rise in values. “Given that upper quartile markets typically lead both the up and down swing, it’s unsurprising that Sydney unit values are recording the strongest growth among the capitals. With a median value of more than $775,000, units across Sydney are more expensive than the median house values of Brisbane ($772,020), Adelaide ($694,818), Hobart ($691,859), Perth ($593,385) and Darwin ($582,415).”
Despite the flow of newly advertised capital city unit listings rising 1.7% above the previous fiveyear average over the four weeks to April 2nd, the total stock of capital city unit listing held approximately -10.7% below average. “While it’s typical to see the flow of new listings rise ahead of Easter, the four weeks to April 2nd was the first time the capital city unit trend rose above the previous five-year average since mid-September last year. This is likely to be a seasonal peak in the new listing trend, with listing activity typically cooling through winter before ramping up again in spring,“ Ms Ezzy said.