We're almost at the end of the year and property prices have kept rising for almost 11 months in a row despite 13 interest rate rises, high inflation and reduced borrowing capacity.
The peak-to-trough change in Australian house prices in 2022 was 9 per cent according to Corelogic, and only 4 per cent according to PropTrack, which is confusing those analysts who were looking for prices to drop further this year on the back of interest rate increases.
But now it is clear that our property markets bottomed in January 2023 and we have moved into the next phase and our combined capital cities have increased in value by 8.0% in the year to date. That's very different to the pessimistic forecasts made by the RBA and many of the bank economists only 12 months ago of double digit price falls.
And it's likely property prices and rents are going to keep increasing, but more slowly for the remainder of the year and into next year.
With the pipeline of new listings now diminishing as the year ends at a time when many buyers are keen to complete their transaction before the holiday break, it's not likely that the latest interest rate rise will stall the market.
Sydney property prices increased by 0.1% over the last week and increased 0.1% over the last month and are up 11.4% year to date, and are 10.1% higher than they were 12 months ago.
Melbourne property prices dropped -0.1% over the last week, also dropped -0.1% over the last month but are up 4.0% year to date, and also 2.9% higher than they were 12 months ago.
Brisbane property prices increased by 0.3% over the last week, increased 1.2% over the last month and are up 11.5% year to date, and also 10.3% higher than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 0.5% over the last month and are now 8.4% higher than they were 12 months ago.
This new property cycle has been driven by an undersupply of good properties relative to current demand, but market momentum is now slowing.
Australia’s housing market continues to defy expectations!
Despite 13 interest rate increases from the Reserve Bank of Australia, which have seen official rates rise by 4.25 per cent over the 18 months, property prices have now been on the rise since early 2023.
With the pipeline of new listings now diminishing as the year ends at a time when many buyers are keen to complete their transaction before the holiday break, it's not likely that the latest interest rate rise will stall the market.
It seems that even the most pessimistic forecasters have had to change their minds and accept that most capital city markets will enjoy double digit capital growth this year, but some of the property bears have come back out of their caves and are predicting values to fall in 2024.
While capital growth is likely to be much more subdued in 2024, our 5 major capital cities should still see price growth next year, while Hobart, Canberra and Darwin may see prices fall a little in 2024.
The underlying reason for continued property price growth will be that the demand to buy homes will continue to exceed supply, but moving forward our markets will be fragmented with a flight to quality properties.
It will be much the same for our rental market where the supply / demand equation is so far out of balance that we’ve experienced an unprecedented rental crisis with historically low vacancy rates and skyrocketing rents and this will continue into 2024.
On the auction front, with 2,972 homes auctioned across the capitals, easing slightly from the 2,990 held the week prior, this is the third busiest auction week of the year-to-date (behind the week ending 29 October and the week ending 19 November).
Last week's auction numbers were 23.9% higher than the numbers seen this time last year (2,414).
While vendor numbers remain high, buyers have become more cautious, with last week's preliminary capital city clearance rate coming in at 65.9% - the lowest since mid-March (65.0%).
With 2,261 results collected so far, last week's early success rate was 2.1 percentage points below the previous week's preliminary rate (68.0%, revised to 62.4% at final numbers) and will likely also revise below the decade average (65.8%) once finalised.
See Corelogic's full auction report below.
Corelogic report that:
Sydney property prices increased by 0.1% over the last week and increased 0.1% over the last month and are up 11.4% year to date, and are 10.1% higher than they were 12 months ago.
Melbourne property prices dropped -0.1% over the last week, also dropped -0.1% over the last month but are up 4.0% year to date, and also 2.9% higher than they were 12 months ago.
Brisbane property prices increased by 0.3% over the last week, increased 1.2% over the last month and are up 11.5% year to date, and also 10.3% higher than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 0.5% over the last month and are now 8.4% higher than they were 12 months ago.
Clearly we are in the early stages of a new property cycle driven by an undersupply of good properties relative to increasing demand.
2023.11.30
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