It's now a buyers' market for units – CoreLogic

Selling conditions across Australia’s unit market continued to weaken as national dwelling values fell for the third straight month, according to new data from CoreLogic.

Unit values fell 0.9% over the month and 1.4% over the three months to July, according to CoreLogic. National unit values are now 0.2% lower than they were a year ago at this time. While national house values have recorded steeper monthly and quarterly declines at 1.4% and 2.2%, respectively, stronger growth over the first four months of the year means that house values are still 1.2% higher than they were at the beginning of 2022.

CoreLogic economist Kaytlin Ezzy said that while the price gap between units and houses is narrowing, falling values have made it a buyers’ market for units.

“Units are relatively more affordable and attract strong investor activity, meaning value changes across the medium- to high-density sector are proving to be less volatile than the house segment,” she said. “However, market factors, including increased interest rates, lower consumer sentiment and higher cost of living, mean selling conditions for units have also shifted in favour of buyers.”

Median days on market for units increased in the three months to July over the three months to April. All unit markets except South Australia and the Northern Territory saw the average selling time increase, CoreLogic found.

Units in Hobart and regional Tasmania are now taking about three times as long to sell as they did in the three months to April. Nationally, the median time on market is up by six days. Vendors are also having to offer larger discounts to nail down sales, with median vendor discounting rising from 2.9% in the three months to December to 3.8% in the three months to July.

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Unit values in the combined capitals fell for the third consecutive month, down 1%, taking capital city unit values down 1.8% over the three months to July.

“Across the individual capital cities and rest-of-state unit markets, Hobart and regional Tasmania recorded the largest decline in values over July, down 2.5% and 2.1%, respectively,” Ezzy said. “The sharp deceleration in value growth was likely caused by an increase in newly advertised unit listing across Tasmania in July. While still well below the previous five-year average, this increase saw total advertised unit supply across Hobart rise 51.0% above the levels recorded in July 2021.”

Unit values across Sydney (-1.5%) fell for the sixth straight month, bringing values approximately $35,000 lower over the year to date. Values across Melbourne fell 1.2% in July and 2.1% over the quarter, CoreLogic reported.