2023 wraps up with huge 8.1% property price gain
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Another surprising year for Australian property has come to a close with home values jumping up more than +8 per cent over just 12 months according to CoreLogic data.
The lead-in to 2024 has seen greater diversity between markets, though, as some have continued to grow at staggering speed while others have started to wind back.
Find out where we are today and what lies ahead for Australia's property markets.
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National property prices: December 2023
After a clear cooling of some markets in November, things followed a similar trend in December as national growth registered at +0.4 per cent for the month.
Still, that brought total gains for the year to +8.1 per cent for Australian homes.
| Market | Month | Quarter | Annual | Median value |
|---|---|---|---|---|
| Sydney | 0.2% | 0.8% | 11.1% | $1,128,322 |
| Melbourne | -0.3% | -0.2% | 3.5% | $780,457 |
| Brisbane | 1.0% | 3.7% | 13.1% | $787,217 |
| Adelaide | 1.3% | 3.7% | 8.8% | $711,604 |
| Perth | 1.5% | 5.1% | 15.2% | $660,754 |
| Hobart | -0.3% | 0.4% | -0.8% | $656,947 |
| Darwin | 0.7% | 0.4% | -0.1% | $496,309 |
| Canberra | -0.1% | 0.6% | 0.5% | $843,171 |
| Combined capitals | 0.4% | 1.5% | 9.3% | $832,193 |
| Combined regional | 0.3% | 1.5% | 4.4% | $605,780 |
| Australia | 0.4% | 1.5% | 8.1% | $757,746 |
Sydney and Melbourne were the first markets to climb in the 2023 rebound, and they've since become the first markets to ease back in the latter part of the year. Sydney was up just +0.2 per cent while Melbourne recorded a dip of -0.3 per cent.
On the other side of the coin, Brisbane, Adelaide and Perth all surged ahead by +1 per cent or more for the month, continuing to break new price records.
Australia's smaller capitals are also showing mixed monthly results. Hobart and Canberra saw slight declines while Darwin jolted upwards by +0.7 per cent.
On the whole, regional markets delivered nominal gains, with regional Tasmania being the only state to post a loss in December.
CoreLogic's research director Tim Lawless noted that "This was the smallest gain in our national monthly HVI since values started rising in February."
He added that “After monthly growth in home values peaked in May at 1.3%, a rate hike in June and another in November, along with persistent cost of living pressures, worsening affordability challenges, rising advertised stock levels and low consumer sentiment, have progressively taken some heat out of the market through the second half of the year."
Supply and demand is the key variable between states
Much of the 2023 property rebound was driven by a shortage of listings that helped to boost home values despite still-rising interest rates.
Initially, the lack of stock was fairly broad-based, but the second half of the year saw listings climb considerably in some markets while others remained exceptionally tight.
"Such diversity across the capital cities can be broadly attributed to factors relating to demand and supply,” Mr Lawless explained.
“In Perth, Adelaide and Brisbane, housing affordability challenges haven’t been as pressing relative to the larger cities, and advertised supply levels have remained persistently and substantially below average."
The power of that shortage can be seen when comparing Brisbane and Melbourne.
Two years ago, Melbourne's median home price was nearly $100,000 more than Brisbane's. As of December, Brisbane has overtaken Melbourne as the more expensive city, due in large part to an ongoing imbalance between supply and demand in South East Queensland.
"The cities where home value growth has been lower or negative through the year are showing higher than average levels of advertised supply alongside annual home sales which ended the year below the five year average," Mr Lawless said.
Regional markets cap off a slower and steadier year for some
Regional locations all around the country experienced remarkable rates of growth during the first two years of the pandemic as a 'race for space' mentality saw regional values explode by more than +45 per cent.
Now, like their capital city counterparts, a growing diversity has emerged across the states' regional markets.
| Market | Month | Quarter | Annual | Median value |
|---|---|---|---|---|
| Regional NSW | 0.3% | 1.0% | 2.4% | $711,891 |
| Regional VIC | 0.0% | 0.5% | -1.6% | $564,983 |
| Regional QLD | 0.5% | 2.3% | 8.7% | $611,797 |
| Regional SA | 0.4% | 1.5% | 9.4% | $390,023 |
| Regional WA | 0.8% | 3.6% | 8.4% | $464,062 |
| Regional TAS | -0.6% | 0.3% | -0.1% | $506,940 |
| Combined capitals | 0.4% | 1.5% | 9.3% | $832,193 |
| Combined regional | 0.3% | 1.5% | 4.4% | $605,780 |
On an annual basis, regional Queensland, South Australia and Western Australia have all exceeded the national benchmark of +8.1 per cent gains in 2023, while NSW, Victoria and Tasmania have been considerably softer.
“Stronger conditions across capital city markets is a reversal of the early COVID trend which saw regional markets experience higher demand amid strong internal migration," Mr Lawless said.
"Regional migration trends have mostly normalised through 2023, and the significant capital gains recorded through 2020 to 2022 has meant many regional markets have become less affordable."
What's next for Australian property?
After a year that was dominated by rising interest rates, 2024 is projected by many to be marked by a period of stability followed, potentially, by rate cuts later into the year.
While CoreLogic's report noted that "another cash rate hike can’t be completely ruled out," the trajectory of inflation is pointing to that outcome being "increasingly unlikely."
If rates were to be cut further into 2024, it "could help to re-stoke demand later in the year."
Mr Lawless did point out, however, that "Stoking a housing value rebound on the back of lower interest rates is arguably an outcome that policymakers would like to avoid.
"Even if interest rates do come down later this year, credit availability is likely to remain relatively tight."
Until then, CoreLogic expects "milder" outcomes for most markets as high interest rates and poor affordability continue to put pressure on buyers.
There are some tailwinds worth noting, though — particularly an ongoing housing shortage with little in the pipeline as construction costs remain excessively high.
"The burgeoning undersupply of newly built housing is likely to keep a floor under housing prices to some extent over the coming year," Mr Lawless said.
"Additionally, there is a clear lag between overseas migration and purchasing demand. With overseas migration moving through record highs last year, we are likely to see the lagged demand side impact flowing through to purchasing activity over the coming years."
