Sydney's dwelling market appears to be going two separate ways, with houses striking a growth while units post declines, according to the latest report from CoreLogic.
While overall dwelling values in Sydney rose by 0.4% in January, looking at the market segments reveals two different stories.
Over the month, house prices hit $1.03m, representing increases of 0.7% monthly, 2.7% quarterly and 3.1% annually. On the other hand, unit values in Sydney declined to $734,198, down by 0.1% monthly, 1% quarterly, and 0.6% annually.
Tim Lawless, research director at CoreLogic, said houses outperforming units in terms of price growth has been the case for recent months.
"Demand for units has diminished through COVID-19 amidst record-low levels of investor participation and changing living preferences. At the same time supply levels are heightened in some precincts," he said. "While demand and supply remain imbalanced, we are likely to see units continue to underperform relative to detached housing market."
According to data from Realestate.com.au, some Sydney regions and suburbs posted significant declines in unit values. For instance, units in North Ryde reported a 13.5% decline in values. There were also major declines recorded in Berala (11.5%), Auburn (10%), and Parramatta (9%).
The divergence between the two market segments was also observed in the rental markets.
During the month, rents in Sydney went up by 2.1% for houses but declined by 5.6% for units. It is worth noting, however, that on a month-on-month basis, unit rents in the city grew by 8%, the first increase recorded since March last year. This indicates that the rate of decline in unit rents is easing.
Another continuing trend over the month was the better performance of regional markets in New South Wales compared to Sydney. Dwelling values in the state's regional markets grew by 9.5% annually, stronger than the 2% gain reported in Sydney.
"Internal migration data shows more people are leaving Sydney for regional areas, resulting in a transition of activity from the metro regions to the outer fringe and regional markets," Lawless said.