️ Highlights:
1. The housing market in 2023 faced challenges such as climbing interest rates, stretched affordability, and the “fixed rate cliff,” but resilience prevailed overall.
2. Affordability constraints became more pressing towards the end of 2023, leading to increased demand for lower-priced housing markets like Perth, Brisbane, and Adelaide.
3. Perth dominated the top 10 spots for strongest growth in house values, with several suburbs experiencing more than 30% annual growth.
4. The rental market saw significant growth due to high levels of net overseas migration, particularly in markets with historical exposure to overseas migration.
5. Looking ahead to 2024, market conditions are expected to become more subdued due to deteriorating metrics, including a rise in the unemployment rate, slower GDP growth, and higher interest rates. Rental growth may slow down but is unlikely to decline nationally.
Reflecting on the Housing Market’s Performance and Future Outlook
The Australian housing market in 2023 demonstrated remarkable resilience amidst the challenges of rising interest rates, stretched affordability, and the looming ‘fixed rate cliff’. CoreLogic’s comprehensive ‘Best of the Best’ report sheds light on the market’s performance and offers insights into what 2024 might hold.
Resilience in the Face of Economic Pressures
Eliza Owen, CoreLogic’s Head of Research, noted that despite the economic pressures, home values showed broad resilience. However, signs of strain from high housing costs were evident, with a more subdued outlook for capital growth expected in 2024. Housing activity saw an initial rebound in early 2023 as buyers capitalized on lower prices, but affordability constraints later in the year shifted demand towards more moderately priced housing segments.
Performance Highlights from 2023
The ‘Best of the Best’ results for 2023 revealed that lower-priced housing markets like Perth, Brisbane, and Adelaide experienced resilient conditions and strong annual growth through to the end of November. The national top 10 sales featured prominent suburbs like Sydney’s Bellevue Hill and Vaucluse, Melbourne’s Hawthorn and Toorak, and Coopers Shoot in Byron Shire. Sydney’s Mosman recorded the highest total value of house sales, while Surfers Paradise led in unit sales.
Growth and Decline Across Regions
Perth dominated the list for the strongest growth in house values, with suburbs like Brookdale, Armadale, and Hilbert seeing annual increases of over 30%. In contrast, Hobart’s upper-end suburbs like North Hobart and Taroona experienced significant declines. Regional markets also showed varied performance, with NSW’s Tralee and QLD’s Emerald standing out for their capital growth.
Rental Market Dynamics
The rental market in 2023 was significantly influenced by high levels of net overseas migration, particularly in markets with historical exposure to overseas migration. Kensington in Sydney and Lakemba in Sydney’s Inner South West saw the highest rent growth for houses and units, respectively.
Looking Ahead to 2024
The outlook for 2024 suggests a more subdued residential housing market. Factors contributing to this include a gradual easing of capital growth, declining transaction volumes, and a lower clearance rate. Economic indicators like rising unemployment, slowing GDP growth, and the lowest household saving rate since the GFC at 1.1% point towards a challenging year ahead. However, there’s potential for market conditions to strengthen towards the end of the year if there’s a loosening in monetary policy.
Conclusion
The Australian housing market’s journey through 2023 was marked by resilience and recovery, despite significant economic headwinds. As we move into 2024, the market is expected to face more subdued conditions, but the potential for an upswing later in the year remains. This evolving landscape underscores the importance of staying informed and adaptable in the ever-changing world of real estate.