In a year of fluctuating fortunes, Australian property prices witnessed an 8.1% climb in 2023, marking a significant rebound from the previous year’s 4.9% decline. Despite this recovery, the pace of growth cooled as the year drew to a close, setting the stage for a more subdued beginning to 2024, according to CoreLogic’s Home Value Index (HVI).

 

This increase, while notable, fell short of the staggering 24.5% boom experienced in 2021, with property values in five out of the eight capital cities still trailing behind their peak records. The national median home value ascended to $757,746, with Sydney leading the charge with an 11.1% increase to $1,128,322, followed by Melbourne and Brisbane with more modest rises.

 

December’s modest 0.4% uptick in property prices was the smallest monthly gain since the upward trend commenced in February, signaling a market shift influenced by several factors. CoreLogic’s research director, Tim Lawless, pointed to the dampening effects of rate hikes, cost-of-living pressures, affordability issues, and a decline in consumer sentiment as key contributors to the market’s second-half slowdown.

 

The disparity in home value growth rates across the capitals emerged as a defining trend, with Perth, Adelaide, and Brisbane enjoying more robust increases. In contrast, Melbourne and Sydney’s growth decelerated significantly post-June rate hike, with Melbourne even seeing a drop in the final two months.

 

This variation, Lawless explains, stems from differences in demand and supply dynamics, with affordability less of an issue in cities like Perth, Adelaide, and Brisbane compared to their larger counterparts, which also faced higher levels of advertised supply.

 

Interestingly, capital cities outperformed regional areas in 2023, reversing the pandemic-induced trend towards regional migration, with capitals growing by 9.3% versus the regions’ 4.4%.

 

Looking ahead to 2024, CoreLogic anticipates a “milder outcome” for housing values, influenced by high-interest rates and softer economic conditions. While another cash rate increase appears increasingly unlikely, a potential rate cut later in the year could reignite demand. However, credit is expected to remain “relatively tight,” even with a softer interest rate environment in the latter half of 2024.

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