Property sales remain above pre-pandemic levels in FY23

PEXA’s Property Insights report for the 2022–23 financial year showed 665,000 properties were settled over the 12-month period, which was 18.6 per cent lower than the record highs seen during FY21–22.

Notably, the figures remain 11 per cent higher than the levels recorded just before the pandemic in FY19–20.

PEXA’s head of research Mike Gill said the FY23 results were driven by weak transaction volumes during the first half of the year, with all states recording different levels of decline.

However, he noted the second half of the financial year showed positive signs of recovery.

The data followed a notable surge in house prices reported in the June quarter, up 2.7 per cent, marking the steepest gains since late 2021, according to Domain’s House Price Report.

Despite a soft start to the year, residential sale settlement volumes picked up from March across all mainland states, with June settlement volumes finishing the year strongly at comparable settlement numbers to the prior boom year.

Settlement numbers recorded from March 2023 onwards the financial year finished strongly with more than 66,000 property settlements recorded in the month of June – up from 58,000 in May and 48,000 in April – indicating a rebound in settlement volumes.

“This suggests the market has already bottomed out and is beginning to recover as we enter FY24,” Mr Gill commented.

While Mr Gill acknowledged the high interest rate environment will continue to be a challenge for property settlements, he noted demand for property is strong and settlement volumes are lifting.

“There are a number of factors that will continue driving the property market this year, including increased net migration, the trend toward smaller households, low volumes of new listings as sellers wait for the market to improve, and a very tight rental market,” he said.

Data showed the majority of states experienced significant declines in residential sale settlements during the most recent financial year, with double-digit drops being the norm.

During the 12-month period to June, NSW saw a decline of 21.6 per cent, Queensland was down 19.9 per cent, Victoria decreased by 18.1 per cent, and South Australia experienced a decline of 20.6 per cent. In contrast, Western Australia demonstrated remarkable resilience, with volumes only dropping by 9.9 per cent.

Interestingly, settlement volumes in FY23 for Queensland, Western Australia, and South Australia managed to remain above the levels observed in FY20. However, in the larger states of NSW and Victoria, the figures dropped below the levels recorded prior to the onset of the COVID-19 pandemic in FY20.

For the second consecutive year, Queensland reaffirmed its position as the top performer nationwide in terms of transaction volumes with over 176,000 residential sale settlements during the financial year.

The Sunshine State was followed by Victoria, where a total of 164,883 residential property transactions occurred during the period.

The total value of property sales also fell 18.6 per cent from $740.4 billion in FY22 to $603 billion in FY23 but remained well above the $408.8 billion sold in FY20.

NSW topped the charts for residential property spending, with a total of over $181.4 billion exchanged in property transactions.

Victoria had the second-highest spend on property ($135.7 billion) while Queensland came in third ($123.3 billion).

Growth in settlement volumes varied across price bands between the three largest states in the June quarter.

In NSW, property sales across all price bands were up double digits. A similar trend was also observed in Queensland, although higher-priced properties (valued above $2 million) led the recovery.

This trend is in contrast to Victoria, where lower-priced properties (valued below $500,000) saw the greatest increase in settlement volumes in the June quarter (up 37.2 per cent), largely driven by high-development areas of Melbourne.

Commercial sale settlements declined in all three eastern states in FY23, with NSW experiencing the largest drop – down 21 per cent year on year.

Meanwhile, the Queensland commercial market performed the strongest in FY23, only falling 9 per cent.

NSW continued to lead the pack for aggregate value, which reflected the higher average transaction values for commercial property in Sydney.

A total of $30.8 billion was spent on commercial property in NSW during FY23, down 22.3 per cent from the boom year of FY22.

[Related:Brokers witness renewed demand amid rising house values]