Australian Property Market Reflects Mixed Results in 2023 with Prominent Gains in Some Cities

In an insightful examination of the Australian property market, reports by Hanan Dervisevic and Swati Pandey highlight a year of contrasting fortunes across different regions in 2023. Dervisevic, in her comprehensive analysis, underscores an overall national rise in property values by 8.1 per cent, while Pandey’s observations focus on the slowing growth towards the year’s end, particularly in major cities like Sydney.

The 2023 landscape was marked by significant growth in cities like Perth, Brisbane, and Sydney, which saw increases of 15.2 per cent, 13.1 per cent, and 11.1 per cent, respectively. This surge contrasted with the minor declines in Hobart and Darwin. Tim Lawless, CoreLogic’s research director, notes the varying pace of growth, stating, “In Perth, Adelaide, and Brisbane, housing affordability challenges haven’t been as pressing relative to the larger cities.” This disparity underscores the diverse market conditions across Australia.

Interestingly, regional markets also experienced a boost, with a 4.4 per cent increase in values. Despite these gains, the national dwelling values remained 31.3 per cent above pre-pandemic levels, indicating a sustained recovery trajectory since COVID-19.

However, as Pandey reports, the end of 2023 saw a cooling trend, particularly in Sydney and Melbourne, with only marginal increases. This deceleration signals a shift in market dynamics, influenced by factors like affordability and borrowing costs. CoreLogic Inc.’s December report revealed a mere 0.4% price increase in Australia’s major cities, reflecting this slowdown.

Looking ahead to 2024, predictions remain cautious yet optimistic in certain areas. Louis Christopher, SQM research director, anticipates average city prices to fluctuate between -1 and +3 per cent nationally, with Brisbane and Perth expected to sustain growth. However, he warns of potential price declines in Sydney, Melbourne, Canberra, and Hobart.

Eliza Owen from CoreLogic adds a layer of insight, suggesting that slumps might cascade from the upper end of the market to more affordable segments. “Even markets with very strong performance could see a reduction in the pace of growth through 2024,” she says, indicating a nuanced future for the Australian property market.

In summary, 2023 was a year of mixed fortunes in the Australian property market, with significant gains in some areas counterbalanced by cooling trends towards the year’s end. As we move into 2024, the market appears poised for a complex interplay of factors that will shape its trajectory.

References:

“Australian property values rose 8.1 per cent in 2023. Here’s what the market has been doing in your area” by Hanan Dervisevic  https://www.abc.net.au/news/2024-01-03/housing-market-year-in-review-2023/103224452 

“Australian Home-Price Growth Slows Further as Sydney Cools” by Swati Pandey https://www.bloomberg.com/news/articles/2024-01-01/australian-home-price-growth-slows-further-as-sydney-cools