Australian home values surged in 2023, new data shows.
CoreLogic’s national Home Value Index rose 8.1% in 2023, a significant turnaround from the 4.9% drop seen in 2022, though well below the 24.5% surge recorded in 2021.
December’s 0.4% increase saw 2023 finish with a relatively soft monthly rise in home values.
CoreLogic’s research director Tim Lawless observed that this was the smallest gain in the national monthly index since values started rising in February.
“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”, Lawless said.
Despite the annual 8.1% increase, the year was punctuated by diversity, with the annual change in housing values ranging from a 15.2% surge in Perth to a 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.
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 June.
Melbourne values declined through November and December, while Sydney home values are stabilising with a monthly growth rate of just 0.2% in the final two months of the year. The smaller capital cities have been soft through most of the year, with Hobart (down 0.8%) and Darwin (down 0.1%) recording an annual decline in values in 2023, while the ACT recorded a rise of just 0.5%.
“Such diversity across the capital cities can be broadly attributed to factors relating to demand and supply”, Lawless said, adding that in Perth, Adelaide and Brisbane, 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.”
Capital cities generally recorded stronger growth conditions relative to regional areas, the figures show. 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”, Lawless noted.
“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.”
Despite improvements across most regions in 2023, five of the eight capitals are still recording home values below record highs.
At the end of the year, 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%.
