The Australian property market experienced a rollercoaster journey throughout 2023 – marked by nuanced shifts and unexpected turns – before ending the year at a record high, according to the Real Estate Buyers Agents Association of Australia (REBAA).
REBAA President Melinda Jennison said the trajectory of Australia’s property market in 2023 was a testament to its resilience and adaptability.
“Regional variations, supply-demand dynamics, and changing rental landscapes have all played pivotal roles in shaping this narrative,” Ms Jennison said.
“As the year draws to a close, the real estate sector continues to navigate the waves of change, offering both challenges and opportunities.
“The intricate interplay of factors continues to shape the nation’s property landscape, creating an environment where vigilance and adaptability remain key for both buyers and sellers.”
Ms Jennison said signs where emerging at the start of this year that the minor national housing market downturn was losing momentum – even as interest rates climbed higher.
“The subsequent months witnessed an unforeseen rebound, catapulting property prices into double-digit growth between February and October in the cities of Perth, Sydney, and Brisbane,” she said.
“The surge in prices, however, was not uniform on a monthly basis across the nation. As listing volumes swelled in areas such as Melbourne, Sydney, Hobart, and Canberra, the pace of monthly price growth moderated.
“Conversely, Perth, Adelaide, and Brisbane, where advertised stock levels either declined or remained stable, experienced a more accelerated rate of property price growth over the last quarter.”
Ms Jennison said this divergence underscored the influence of supply and demand dynamics at a local level on market performance.
Strong rental growth, driven by the tightest rental market on record, resulted in substantial increases in both house and unit rents around the nation this year, she said.
“Adelaide and Brisbane led the charge in January, with the most substantial increase in annual house rents, according to CoreLogic. However, by October, the scene had shifted, with Perth and Melbourne taking centre stage in the annual house rent increase rankings,” Ms Jennison said.
“Unit rents mirrored a similar narrative, with Sydney and Brisbane initially experiencing the greatest annual change up to January.
“In the evolving landscape, Perth claimed the lead by the end of October, while Brisbane held firm in second place for unit rent price growth.”
NEW SOUTH WALES
REBAA NSW State Representative Linda Johnson said over the past year, the property market in New South Wales has undergone significant transformations, characterised by distinct trends in both capital cities and regional areas.
“Property prices have experienced notable fluctuations, with varying impacts in urban and regional settings,” Ms Johnson said.
“From what we are hearing and seeing out in the field, whilst there has been a pricing correction in most areas, prices remain well ahead of pre-COVID market conditions.
“In major metro cities and regional towns, there has again been a general upward trajectory in property prices, fuelled by the consistent sentiment across the state of increased demand and limited housing supply.”
Ms Johnson said this surge has been attributed to factors such as consecutive interest rate rises and investors re-entering the market and competing in the first home buyer and family average price ranges.
“Affordability issues are also pushing people further out and there is a quest for a better lifestyle, work from home/office balance, as well as a renewed focus on housing as a stable investment amid economic uncertainties,” she said.
“In addition, there has been a period of paralysis, whereby sellers have decided to stay put in fear of not being able to find their next home. We are seeing an increase in delayed settlements, with ‘on or sooner’ clauses added to sale contracts, to alleviate the pressure of potential homelessness, bridging finance and so on.”
Buyer activity has intensified across the state, reflecting a growing confidence in the real estate market, since despite the threat of another one or two interest rate rises, they seem set to stabilise over the next period, Ms Johnson said.
“In urban centres and coastal locations, A Grade property continues to generate strong competition, with low days on market and prices being achieved in some cases, well above expectation, while B and C Grade property tend to linger on market and are quite price sensitive,” she said.
VICTORIA
REBAA Victoria State Representative Luke Assigal said the Victorian housing market experienced stagnant house prices in 2023 due to monthly increases in interest rates and the additional taxes introduced to property investors by the Victorian Government.
Although Melbourne’s median house price declined for seven consecutive quarters, it still remains higher compared to pre-pandemic levels, he said.
“On the supply side, the number of dwellings under construction have decreased, and it is projected that the level of new completed dwellings in 2023 will be the lowest in seven years,” Mr Assigal said.
“This, coupled with the shortage of established properties for sale and the rapid population growth, is expected to create an imbalance between supply and demand, leading to potential price increases in 2024.”
Mr Assigal said rental rates for houses and units in Melbourne have risen by over 10 per cent in the past year and have reached record highs.
“The vacancy rate for residential properties has increased slightly to 2.4 per cent, although it remains below the 10-year average,” he said.
“In regional areas of Victoria, median house and unit prices remained steady in the September 2023 quarter but were lower compared to levels recorded a year ago. However, rental rates in these regional markets have remained robust, with average weekly rents achieving all-time highs.”
Mr Assigal said the relative affordability of regional properties compared to metropolitan areas is expected to drive the outperformance of the regional housing market in the short term.
“Ballarat has demonstrated the strongest rental performance, followed by Bendigo and Geelong, with median rents for houses and units experiencing growth in these areas, alongside low vacancy rates,” he said.
QUEENSLAND
REBAA QLD State Representative Joanna Boyd said limited housing stock amidst surging demand had propelled Sunshine State property prices to unprecedented highs in 2023.
“The landscape has been defined by a scenario where buyers – driven by fear of missing out (FOMO) – are compelled to swiftly make purchase decisions, often necessitating increased budgets to secure homes,” Ms Boyd said.
“Renovated properties in particular experienced soaring prices due to their market scarcity, plus, he heightened demand, especially for these upgraded homes, created a competitive environment that favoured sellers, with prices reaching remarkable levels.”
However, amidst these challenges, the October pause in interest rate hikes reinstated confidence among investors and non-owner occupier first-home buyers, allowing for a moment of stabilisation in the market, she said.
“Queensland’s allure as a popular and affordable destination has persisted, further bolstered by the promise of infrastructural developments in preparation for the 2032 Olympics,” she said.
“This continued appeal contributes significantly to the state’s housing market, attracting both local and interstate migration.”
Ms Boyd said Brisbane also experienced a significant decrease in new listings, nearly 18 per cent lower than the previous five-year average and almost 20 per cent lower than the preceding year.
“Population growth in Queensland also remains robust, driven primarily by net interstate migration,” she said.
“Rental markets in Brisbane have historically maintained tight vacancy rates, with the current rate hovering around 1.2 per cent, with asking rents continuing to rise.”
SOUTH AUSTRALIA
REBAA SA State Representative Jess Elam said South Australia’s housing market in 2023 has remained resilient, standing out with its strong performance.
“This remarkable performance can be attributed to a combination of factors including a scarcity of available properties and consistently high demand. As a result, buyers have remained fiercely competitive, driving property prices upward,” Ms Elam said.
“Specific regions within South Australia have witnessed significant growth. Suburbs along the southern coast have experienced substantial appreciation over the past two years, and this momentum has carried into 2023.”
Ms Elam said these suburbs are located 20 to 40 kilometres from Adelaide, offering easy access to the city centre, close proximity to stunning beaches, wineries in McLaren Vale, family-friendly neighbourhoods, and an array of lifestyle amenities.
“This combination of factors makes them attractive to both investors, who benefit from low vacancy rates and high rental yields, and families seeking a lifestyle change, including interstate homebuyers choosing South Australia,” she said.
“The rental market has seen increased demand in both regional and city areas, driven by a rise in relocations, has created a housing landscape marked by heightened competition, reduced supply, and elevated rents.”
Ms Elam said this shortage, particularly for properties under $600 per week, has increased the allure of property investment.
“South Australia’s rental market, especially in Adelaide, is undergoing significant changes, emphasising the importance of comprehending these shifts for both renters and investors,” she said.
“Looking at the overall outlook for South Australia’s housing market, it appears robust. The state has consistently demonstrated growth, supported by steady population growth, ongoing infrastructure upgrades, and its appealing lifestyle.”
TASMANIA
REBAA Tasmania State Representative Sam Spilsbury said Tasmania’s residential real estate market continued to slow throughout 2023, amidst lingering concerns over low levels of investor activity, subdued mainland buyer participation.
“Buyer enquiries also further slowed as we progressed through 2023,” Ms Spilsbury said.
“The recent rise in interest rates has significantly diminished the purchasing capacity of many potential buyers.
“Some have been compelled to exit the market, while others opt to adopt a wait-and-see approach.”
Ms Spilsbury said the diminishing buying activity has allowed the number of properties for sale to rebound, now exceeding the availability 12 months ago by 28.2 per cent.
Over the past 12 months, rental vacancy rates have notably eased, shifting from oner per cent in 2022 to 2.1 per cent, she said.
“In 2023, median rents in Hobart have decreased from $550 per week to $520 per week, while Launceston’s rent remained stable at $450 per week. Rents across the North-West increased by $15 per week over the past year,” she said.
The median house price in Hobart has decreased by 4.8 per cent to $722,500, Launceston has decreased by 5.4 per cent to $540,000, the Northwest Coast has increased by 0.5 per cent to $480,000 and regional Tasmanian has decreased by 0.8% to $605,000.
ACT
ACT State Representative Claire Corby said the ACT housing market may have turned a corner at the tail end of 2023, however it is far from a substantial turnaround.
“Prices have drifted throughout the year as interest rates continued to rise,” she said.
“Houses in Canberra have shown early signs of recovery after four consecutive quarters of decline to post growth of +1.8 per cent in the September quarter.
“The ongoing short supply of quality freestanding homes since the last published data is expected to see Canberra prices continue to make small gains, but the heady days of double-digit growth are a distant memory.”
Ms Corby said Christmas aligns with the posting cycle for employment in the ACT and there has been an uptick in volume in the latter half of the spring selling season but comparative to previous years.
“It’s a small increase that’s left many buyers electing to wait by the sidelines for fresh options in 2024,” she said.
“Meanwhile in the ACT unit market, a number of large-scale redevelopment sites have reached completion in 2023 or were secured for future release.
“Unit prices have seen nil to slightly negative growth patterns throughout the year,” she said.
“The gentrification of the Northbourne Avenue corridor is well under way and the revamped Dickson shopping centre was unveiled, revitalising this inner north hub.
“Also, on the northside, Campbell’s unit development continued to spread into the suburb of Parkes, with multi-storey unit developments now dotting the lakefront across the northside with more in the pipeline.”
Ms Corby said the promise of the light rail line connecting further unit development in Woden has also buoyed interest south of the lake, however the suburban impact has received a cool reception with homes around future light rail stops flagged for contentious zoning changes.
“The demand for quality townhouses as the ‘missing middle’ from downsizers, first home buyers, and busy professionals alike continues to be a source of frustration for many Canberra buyers,” she said.
“Nex year may see some uptake of new secondary residences or granny flats following zoning changes introduced in late November, but the rising cost of construction coupled with restrictions on size and site suitability are likely to hinder any substantial impact.”
REGIONAL AUSTRALIA
REBAA Regional Australia Representative Tiron Manning said housing values across Australia’s regional areas have generally lagged the capital city markets in 2023 overall.
He said regional property markets in NSW have remained generally stable, with property sub $500,000 in the larger cities still showing signs of good demand as quality stock is getting harder to find, rental levels having increased, and — in some areas — still climbing have improved the net yields for investors.
“Property that is over-priced, or has some detraction, tends to spend more time on market. Sale rates have slowed with days on market extending back to pre-COVID levels,” Mr Manning said.
“To date prices have held but into 2024 you would expect to see individual vendors who are experiencing pressure to sell, may potentially take reduced offers in order to speed up a transaction.”
Mr Manning said the rural lifestyle sector has slowed with property between $1 million and $2 million taking longer to transact and buyers remaining cautious.
“There is no anxiousness from buyers to transact, although quality or desirable property is still able to sell at auction in traditionally non-auction markets,” he said.
“Buyers are a mix of local and out of area buyers with some migration of people from the west of the state looking to move to east — although not necessarily the coast or Sydney.”
According to a local REBAA member, the Victorian regions took a little bit of a hit following the buying frenzy that many experienced in the lockdown days.
The exodus of buyers from the city to the country were the hallmark of 2021, and the vast majority of Victorian regions flourished as a result.
Coastal and remote areas remain lower-priced than their lofty peaks in 2022. Interest rate rises haven’t aided their recovery either.
According to a local REBAA member, values on the Sunshine Coast region have risen now back to pre-COVID levels, after bottoming out in October 2022.
This was partly due to the generally lower number of listings, which are 28.4 per cent below the previous five-year average, and 15 per cent lower than one year ago, according to CoreLogic.
Rentals listings continue to be tight and on the Sunshine Coast are reported to be 32.9 per cent below the previous five-year average with a vacancy rate of 1.1 per cent.
