According to CoreLogic’s latest unit market update, unit values rose 14.3% year-over-year in the 12 months to January, while home values rose 24.0%. 8%.
The gap between home values and dwelling values, on the other hand, hit a new high of 28.3% in January.
During that month, national home prices rose 1.3%, a slight increase from 1.2% in December, while unit values fell 0.4% to 0.3%.
The national median price of a unit is $606,584, with Sydney posting the highest price of $837,640 among capital cities, followed by Melbourne at $624,158, Canberra at $594,992, Hobart at $574,993, Brisbane at $458,149, at $401,647, Adelaide at $393,036 and Darwin at $370,335.
Home growth outpacing unit growth has been part of the market cycle over the past decade, noted Kaytlin Ezzy, CoreLogic research analyst and report author.
However, the current performance gap has been substantially larger than in previous cycles, in part due to “COVID-related demand shocks disproportionately affecting unit demand”, she observed.
“The annual performance gap between houses and units began to narrow in the last three months of last year, in part due to the lifting of lockdowns and border restrictions as well as the constraints of increasing accessibility diverting demand to the medium and high density sector,” says Ms. Ezzy.
The author added that the annual performance gap started to increase again in January, which could be explained in part by the “disparity between the advertised house and the availability of units”.
“Listing shortages heralded throughout COVID have helped fuel value growth by creating a sense of urgency among buyers,” Ms. Ezzy explained.
According to CoreLogic’s report, total supply of advertised units in combined capitals fell 3.7% in January compared to the same period last year and was 7.8% lower than the previous five-year average. .
Over the same period, home listings in the capital fell 12.5% from the same period last year and 32.7% below the five-year average.
Still, Ms. Ezzy pointed out that despite the underperformance of real estate stocks nationally, it should be noted that growing conditions in individual state capitals and regions have produced mixed results.
Relative to their housing markets, Canberra (5.6%), Darwin (2.6%), regional Victoria (5.7%) and regional Tasmania (9.2%) all saw growth unit rate higher in the three months preceding January.
Despite the observed growth gap between units and homes, Ms. Ezzy thinks the market for units could still see a turnaround in 2022.
“Affordability constraints are likely to gradually shift some of the demand from homes to more affordable units and with international borders opening this month, Australia could gradually see a return to pre-migration levels. -COVID,” she said.
“As most migrants initially rent in Sydney or Melbourne, this could help bolster rental demand in the markets hardest hit by the pandemic, which in turn could boost investor demand and, in ultimately unit prices.”