News & Research

Australia's unit rental market breaks records

After the monthly rate of decline re-accelerated through December and January, CoreLogic's national unit index was flat in February (0.0%), marking a pause in the downward trend seen over the previous nine months.

The stable result was led by a mild increase in Sydney and Adelaide unit values (0.1%) and a moderating in the rate of decline across most of the other capitals. With unit values flat in February, the quarterly trend eased to the smallest decline over a rolling three month period since July last year (-1.4%), with national unit values down just -1.8% over the three months to February. However, the annual trend fell further in February, down -5.6% over the year, with positive monthly growth from the beginning of 2022 falling out of the annual calculation.

National house values also saw the pace of decline decelerate, from -1.0% in January to -0.2% in February, taking the quarterly and annual trend to -2.4% and -8.6%, respectively.

One of the main factors helping to support the current flattening in values is the tight advertised supply.  Total advertised unit listings rose above average through the middle of 2022 as the first few rate hikes began to impact buyer demand. However, the flow of fresh unit listings has fallen well below average through the final quarter of 2022 and through 2023 to date, reducing total listing levels and helping to support unit values.

Over the four weeks to February 26th, total capital city unit listings were -9.8% below this time last year and down -11.6% compared to the previous five-year average.

Other highlights from this month's Unit Market Update include:

  • Nationally unit rents have increased 13.7% in the 12 months to February, the highest annual growth on record.
  • The pace of monthly rental growth continues to accelerate across Australia's unit market, from a 1.0% increase in January to a 1.2% rise in February.
  • National unit vacancy rate reach a new record low of 0.88%.
  • Unit vacancy rates in Sydney (0.96%), Melbourne (0.62%), Adelaide (0.24%), and Perth (0.65%) all hit new record lows in February.
  • Unit values stabilised in February, marking the first pause in falling values in nine months.
  • Unit values increased slightly in Sydney and Adelaide (0.1%).
  • Values have fallen -5.6% in the 12 months to February, compared to house values, which have declined -8.6% over the same period.
  • Australia’s more expensive unit markets are showing the first signs of a rebound with positive growth.
  • Fuelling the growth in values is a shortage of capital city unit listings, down almost 10% this time last year.

Outlook for the unit market

The outlook for until values and the broader market is looking more positive than last month. Although still around GFC and early pandemic levels, consumer sentiment held steady in February, and labour markets remained extremely tight. New data released from APRA showed that mortgage arrears remain near record lows, and a softening of language from the RBA along with recent banking sector uncertainty has the financial market predicting a pause in the rate-tightening cycle.

While a pause or peak in the rate hiking cycle could see values stabilise or even rise moving forward, several downside risks still exist. Arguably the full impact of interest rate rises is yet to be realised, with approximately 35% of mortgage holders still on a fixed rate. As the increased cost of debt begins to impact these borrowers, we could see the number of distressed listings increase, adding downward pressure on values. Additionally, we could see a larger portion of investors owned properties, which are typically in the medium to the high-density sector, hit the market as investors struggle against a negative cash flow.

Download a copy of the Unit Market Update


Kaytlin Ezzy

Meet Kaytlin Ezzy



As an economist, Kaytlin is a key member within CoreLogic’s research team. Highly efficient and flexible, she specialises in collating large and customised data sets, data visualisation and residential data reports.

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