contribute to the underperformance of unit values
With a record-high number of units currently under construction nationwide, the capital growth performance of units is weaker than houses in certain cities and we anticipate that this trend will continue.
The CoreLogic Home Value Index shows that over the 12 months to August 2016, combined capital city house values have increased by 7.2% compared to a 5.5% rise in unit values.
In Melbourne, Brisbane, Adelaide and Canberra, the change in unit values over the past year has been less than half that of houses. This in itself is interesting, particularly when you consider that Melbourne and Brisbane in particular are currently experiencing historic high levels of new unit construction. The fact that in many of these cities substantial increases in unit stock is expected over the coming years, it is reasonable to anticipate that the gap between the annual change in house and unit value will persist and potentially grow larger.
Taking a longer-term look at the change in house and unit values since December 2008 shows clearly that overall value growth has been much stronger in Sydney and Melbourne than anywhere else. Over the period, both house and unit values are higher across each capital city however, houses have outperformed units in all cities except Hobart and Darwin. In Brisbane, Adelaide, Perth and Canberra, the cumulative growth in unit values has been less than half that of houses over the period. Source core logic