What happened to Melbourne apartment values over August?
Apartment values across Melbourne rose 0.5 per cent over August, according to the latest data released by property data firm CoreLogic.
The August gains put apartment values up 1.6 per cent over the quarter, after 0.4 per cent growth over July and 0.8 per cent in June.
Over the year to date, values are up 6.6 per cent, with the median now sitting at $615,909. The median apartment price at the start of 2021 was $577,000.
Rise
Melbourne house values rose 1.4 per cent over August, marking another month where house performance continues to outstrip apartments, although the gap is starting to narrow given renewed housing affordability constraints.
Throughout the first quarter of the year, capital city house values were rising approximately 1.1 percentage points faster than units each month. By August the average performance gap reduced to 0.7 percentage points.
CoreLogic's research director Tim Lawless believes the convergence of growth in house values and unit values could be another demonstration of affordability becoming more challenging.
“The narrowing gap between house and unit value growth is most noticeable in Australia’s most expensive city, Sydney, where the monthly growth rate for houses was 2 percentage points higher than units in March.
"That ‘gap’ has now reduced to 0.6 percentage points in August.
"Based on median values, Sydney units cost almost $470,000 less than a house. At the same time, the growth gap between houses and units in Melbourne and Brisbane has widened.”
Unit rents are starting to rise in Sydney and Melbourne, which is a good metric for investors to follow. Australia's two biggest capitals were the hardest hit by the strict border closures and lack of international migration.
Spring Street
Nationally, rents have lifted by 8.2% over the 12 months ending August, the largest rise in rents since 2008.
“The weaker trend in unit rents across Australia’s two largest cities is likely a reflection of their greater exposure to temporary overseas migrants as a source of rental tenancy, especially foreign students who would normally underpin inner city high rise rental demand, Lawless says.
"The sharp drop in demand due to closed borders has been exacerbated by high supply levels as both cities come out of an unprecedented surge in inner city apartment construction,” Lawless added.
Sydney unit rents have consistently risen each month during 2021, while in Melbourne, unit rents have been rising since June.