Smaller capitals stole biggest gains as silly Aussie home prices made a splash in ’23
Breaking news. A meek end to the year hasn’t been able to stop Aussie home prices surging by a median 8.1% last year.
But there’s been a few surprises in the final tale of the tape, according to CoreLogic’s research director Tim Lawless with the itty-bitty capitals outscoring their punchier, more favoured and familiar heavyweights.
Moreover, Corelogic’s latest housing report forecasts that an obstinately high cost of cash will more than likely keep any truly stupido rising property prices in relative containment.
All up, Aussie property prices continued to rise over the last weird and wild 12 months, but Tim says five of the eight Aussie capitals are still clocking in with home values below their record highs.
One might recall that cracking COVID-19 pandemic (see, Covid, 19, 2021) wherein Australian property prices soared by 25%.
So, according to CoreLogic’s shiny newest national Home Value Index (HVI), prices rose 8.1% last year, a decent turnaround from the all too crappy -4.9% drop of 2022.
Though, let us recall that one was in comparison to the +24.5% surge recorded in said 2021.
December’s 0.4% increase saw 2023 finish with splutter rather than a pop in monthly home values, Lawless laments.
Last month saw Aussie’s smallest increase in property prices, which The Lawless One puts down to the crunch of living pressures driven by interest rate hikes and inflation.
“This was the smallest gain in our national monthly HVI since values started rising in February,” says Lawless.
“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.”
It was a silly year in so many silly ways, but property perhaps touched peak silliness, with record migration and stupido-tight rental markets.
Despite the annual 8.1% increase, the year was ‘punctuated by diversity’ says Tim, with the annual change in housing values ranging from a preposterous +15.2% surge in the Faraway Downs of Perth to a Wake in Fright -1.6% fall across regional Victoria.
One of the main trends through the year has been the widening disparity in the rate of home value growth across the capital cities.
Dwelling values have been rising at more than 1% each month on average across Perth, Adelaide and Brisbane since May, while in Melbourne and Sydney the pace of growth has slowed sharply since the June rate hike.
Melbourne home values tottered and fell through November and December while Sydney home values steadied with a monthly growth rate of just 0.2% in the final two months of the year.
The smaller capital cities have been soft-as through most of the year, with wee willy wonkle’s Hobart down a boring -0.8% and Darwin not really bothering the scorers (-0.1%) both recording an annual decline in values in 2023.
The ACT, home of so very little, recorded a rise of just 0.5%.
“Such diversity across the capital cities can be broadly attributed to factors relating to demand and supply,” Mr Lawless said.
“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 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.”
Last year Australia’s capital city prices generally whacked their regional counterparts in the money game.
Across the combined capital cities index, dwelling values were up 9.3% in 2023, more than double the 4.4% rise recorded across the combined regional index.
“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. 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,” Lawless says.
Although housing values have risen across most regions in 2023, five of the eight capitals are still recording home values below record highs.
At the end of 2023:
Sydney values remained -2.1% below their January 2022 peak.
Melbourne values were -4.1% below their March 2022 peak
ACT values are still -6.3% below record highs and Hobart values are down -11.2%.
Darwin home values are -2.8% below their cyclical high in August last year, and -7.2% below the record high set back in May 2014.
Let’s not forget it coulda been worse.
So here’s where it was worst – via CoreLogic’s suburb by suburb take published late last month: