Australian Property Market: A Mixed Bag of Growth and Stagnation
The Australian real estate market witnessed a significant upturn in 2023, with an 8.1% increase in property values, as per the CoreLogic National Home Value Index (HVI). This recovery marks a notable shift from the 4.9% decline in 2022, yet it falls short of the extraordinary 24.5% growth of 2021. Henry Thai, in his analysis, highlights this pattern, emphasizing the fluctuating nature of the property market.
CoreLogic’s research director, Tim Lawless, observes a slowing pace in monthly price rises, with December 2023 recording only a 0.4% increase, the smallest since the rise beginning in February. He attributes this to a combination of factors including rate hikes, cost of living pressures, and low consumer sentiment, which “have progressively taken some heat out of the market through the second half of the year.”
The market’s resilience is partly due to buyers’ willingness to meet high prices amidst a shortage of listings and rentals, as noted by Daniel Ho, co-founder and group managing director of Juwai IQI. He points out that areas with a high proportion of owner-occupiers continue to see strong demand, whereas suburbs with higher investor rates face challenges due to low yields.
A striking feature of 2023 has been the divergent trends across different regions. While Perth’s housing values soared by 15.2%, regional Victoria saw a 1.6% decline. This disparity, according to Lawless, can be attributed to varying demand and supply factors, including housing affordability and advertised supply levels.
The capital cities, collectively, outperformed regional areas, with a 9.3% growth compared to the latter’s 4.4%. This trend marks a reversal from the early COVID era, where regional markets had higher demand due to strong internal migration. However, the significant capital gains from 2020 to 2022 rendered many regional markets less affordable.
Despite these gains, several capitals, including Sydney, Melbourne, and ACT, ended the year with home values still below their peak levels. This diversity in the property market’s performance reflects the complex interplay of economic, demographic, and regional factors shaping Australia’s real estate landscape in 2023.
References:
“Australian property prices surged over 8%, but is your city a price growth star or a laggard?” by Henry Thai https://thepropertytribune.com.au/market-insights/australian-property-prices-surged-over-8-but-is-your-city-a-price-growth-star-or-a-laggard/
“Australian home values surge 8.1% in 2023” by CoreLogic https://www.corelogic.com.au/news-research/news/2023/australian-home-values-surge-in-2023
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