Housing market resilience prevailed in 2023: CoreLogic

CoreLogic’s Best of the Best Report for 2023 has summed up Australia’s property performance over the year, revealing the top-performing markets.

Head of research at CoreLogic, Eliza Owen, said that home values held “broadly resilient” under conditions of climbing interest rates, stretched affordability, and the fixed-rate cliff, however, there were still some indications that high housing costs “were biting”, with next year expected to see more subdued capital growth.

“Housing activity rebounded through early 2023 as buyers took advantage of lower prices, however, towards the end of 2023 affordability constraints have become more pressing, skewing demand towards the middle-to-lower end of the pricing spectrum,” Ms Owen said.

“Certainly, lower-priced housing markets such as Perth, Brisbane, and Adelaide saw very resilient conditions through the national downswing period and strong annual growth through to the end of November.”

Looking at the best and worst performers for value growth, Perth claimed eight of the top 10 spots for strongest growth in house values among the capital city markets.

Brookdale, Armadale, and Hilbert all increased by over 30 per cent annually, with median house values sub-$550,000.

House suburbs in Hobart’s upper end were among the weakest capital city performers, with North Hobart and Taroona recording declines of 13.9 per cent and 13.8 per cent, respectively.

Outlook for 2024

According to Ms Owen, recent deterioration in a range of market metrics pointed towards more of a quiet residential housing market in 2024.

“We’ve seen the pace of capital growth ease gradually from June and most notably through November,” she said.

“Transaction volumes nationally have declined an estimated -1.7 per cent over November as well, which is unusual given sales volumes typically increase from October to November.

“These have coincided with a decline in the combined capitals clearance rate since June, which averaged just 61.7 per cent through November.”

With the Reserve Bank of Australia’s (RBA) forecast of rising unemployment, slowing GDP growth and disposable household income, and a low household saving of 1.1 per cent, along with an expectation of interest rates holding higher for longer, Ms Owen stated households are “likely to see their budgets further stretched and more households may fall into acute financial stress.”

Ms Owen added that the impact of weaking market conditions on the upper end of the housing market may “cascade” down to the more affordable segments at a lag in 2024.

“For this reason, even markets with very strong performance could see a reduction in the pace of growth through 2024,” Ms Owen said.

“However, market conditions could once again strengthen towards the end of the year if there is a loosening in monetary policy.”

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