MEZIESBLOG

In a reversal of trends from 2022, which saw a five percent drop, Australian home prices rose significantly in 2023.

However, high inflation and interest rate hikes have slowed growth through the year’s final months.

According to data from property consultant CoreLogic released this week, national house prices increased by 8.1 percent in 2023, well under the 24.5 percent surge in 2021, with the capital Sydney seeing an 11.1 percent annual rise, still 2.1 percent below their January 2022 peak, with a median home value of just under A$1.13 million ($769,530).

House prices in Perth increased by 15 percent and in Brisbane by 13 percent, but in Melbourne, prices only increased by 3.5 percent.

However, CoreLogic analysts said that high interest rates and inflation, a cost-of-living crisis, rising advertised stock levels, and low consumer demand had slowed the market throughout the second half of 2023.

CoreLogic Research Director Tim Lawless said this situation could continue into the first half of 2024.

In November 2023, the Reserve Bank of Australia (RBA) increased rates by a quarter point to 4.35 percent due to inflationary pressures.

Inflation in Australia peaked as high as 7.8 percent last December before dropping to 5.4 percent in the third quarter, but the RBA believes that most borrowers can service their mortgages.

“The trajectory of interest rates through 2024 will be a key factor influencing housing trends, though data suggests another hike was looking increasingly unlikely,” Lawless said, adding that any rate cuts could help stoke demand later in the year.

“If interest rates do move lower, there is a good chance we will see a lift in consumer sentiment and a more positive trend in housing activity and values through the second half of the year,” he further added.