It was a year of 2023 big movements in the property sector with everything from interest rates to housing prices to housing affordability seeing an upward trend nationally.
In a bid to curb worrying inflation, 2023 saw the Reserve Bank of Australia raise rates five times, increasing the February, March, May, June and November cash rate by 25 basis points each time and bringing the total rate increase for the year to 1.25 basis points.
Meanwhile, national home prices – bucking some predictions of a slow-down or a possible property crash – have remained resilient in most states despite higher interest rates.
“Earlier this year national home prices reclaimed 2022’s price falls in their entirety, with the upswing continuing in November as national home prices climbed 0.22 per cent month-on-month to set another fresh record, bringing them up 5.53 per cent so far this year and 1.29 per cent above their previous peak recorded in March 2022,” Eleanor Creagh, senior economist at PropTrack, said after crunching the November national figures.
“Looking ahead, although there is a risk interest rates rise further, they are close to if not already at their peak and while the outlook for the economy is weaker, population growth is set to continue rebounding strongly.
“Together with the housing shortfall and continued challenging conditions in the rental market, prices are expected to continue to rise despite affordability remaining stretched.”
Domain’s chief of research and economics Dr Nicola Powell said Australia’s 2023 property market would be defined as the year price growth defied high-interest rates and a new cycle began.
“It was a surprise, given that it was largely expected to be the year that rapid rate hikes continued to hit housing demand and would impact price growth negatively,” she said, adding that 13 rate hikes over 18 months have “been a win for savings rates, but the impact on borrowing capacity and mortgage affordability has cut deeply.”
“What subsequently unravelled over this past year was a reverse of expectation that defied logic – as a shortfall of housing supply collided with rapid population growth, a strained construction sector and the tightest rental market on record – and Australian property prices rose.
“House prices for the combined capitals bottomed out at the end of 2022, allowing the new year to commence with a new price cycle, with Sydney leading the pricing recovery, followed by Brisbane, Adelaide and Perth as the only capital cities where house prices have persistently hit all-time highs and avoided any material downturns.
“All in all, as we bid farewell to 2023, it’s safe to say that it was a year in property that surprised everyone,” Powell said.
Home price growth
Factors offsetting higher interest rates
Analysis by PropTrack found strong housing demand in 2023, lifted by constrained rental markets, low unemployment, record overseas migration, and home equity gains of recent years, has worked alongside limited housing stock to offset the effect of higher interest rates.
Prices still on the up – although growth is slowing
In the longest period of consecutive monthly increases since the pandemic boom, PropTrack said home prices nationwide recorded their 11th month of growth, lifting 0.22 per cent in November.
“Although the volume of new listings hitting the market has increased in recent months housing demand has remained strong and prices have continued to rise, albeit at a slower pace,” said Eleanor Creagh.
“At the same time, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing.
“The positive tailwinds for housing demand and a slowdown in the completion of new homes continue to counter the sharp deterioration in affordability and slowing economy.”
Prices nationally have grown 5.53 per cent, completely reversing the big falls seen in 2022. With more properties coming onto the market in Melbourne and Sydney, the spring of 2023 offered more choice for buyers however home prices still moved higher in November.
The pace of growth was seen to slow in every market excluding Darwin, regional NT and regional SA.
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