Despite rising interest rates, worsening affordability, and the ‘fixed rate cliff’, Australia’s housing market stood strong over 2023, according to CoreLogic’s latest Best of the Best Report.
National best of the best
CoreLogic head of research, Eliza Owen, commented that while dwelling values generally withstood the poor conditions, there were indicators that the elevated housing prices would start to impact the market going into 2024, with capital growth likely to be muted.
“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,” 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.”
Perth was the top capital for the strongest growth in house values, claiming eight of the top 10 spots. Brookdale, Armadale and Hilbert’s house values surged by over 30% annually, while their median house values stayed under $550,000.
Weekly asking property prices, Brookdale, WA 6112
In the unit market, Perth (5), Brisbane (4) and Adelaide (1) dominated the top spots. Brisbane’s Slacks Creek units soared by 27.4% over the year, with seven of the top 10 posting median values below $400,000.
Weekly asking property prices, Slacks Creek, QLD 4127
On the other hand, Hobart’s upper end had the worst-performing suburbs for houses, with North Hobart and Taroona reporting declines of 13.9% and 13.8%, respectively.
Weekly asking property prices, North Hobart, TAS 7000
The bottom 10 unit markets were more varied, including areas from Hobart, Darwin, Melbourne, and Canberra.
Focusing on the regions, New South Wale’s (NSW) Tralee was the best performing house market, boasting 34.2% capital growth. Queensland’s (QLD) Emerald experienced the highest value growth for units at 20.9%.
Weekly asking property prices, Tralee, NSW 2620
Meanwhile, Victoria’s (VIC) Rochester had the poorest performing house market, with values declining by 26%, while NSW’s Mudgee witnessed their units plummet by 11.4% over 2023.
Weekly asking property prices, Rochester, VIC 3561
This year, Australia saw record levels of net overseas migration, mainly caused by the post-COVID-19 reversal of migration trends.
Owen said that while this probably placed upward pressure on dwelling prices, the rental market was hit the worst by the spike in migration.
“Since the re-opening of international borders, strong rent growth was exhibited in markets with historically high exposure to overseas migration, and this is also reflected in the Best of the Best results for 2023,” she said.
In terms of houses, Sydney’s Kensington had the largest rental growth in the year to November at 24.9%, nationwide.
Weekly rents, Kensington, NSW 2033
Lakemba in Sydney’s Inner South West had the highest unit rent growth, up by 28.1%, barely edging out Wiley Park’s 28%.
Weekly rents, Lakemba, NSW 2195
The highest gross rental yields for house and units were recorded in Western Australia’s (WA) Kambalda East and Boulder, at 15.5% and 12% respectively.
Property gross rental yield, Kambalda East, WA 6442
With the recent slowdown in market indicators, Owen predicted that 2024 would see the residential housing market slacken.
“We’ve seen the pace of capital growth ease gradually from June and most notably through November. Transaction volumes nationally have declined an estimated 1.7% over November as well, which is unusual given sales volumes typically increase from October to November,” she said.
“These have coincided with a decline in the combined capitals clearance rate since June, which averaged just 61.7% through November.
“The Reserve Bank of Australia (RBA) is forecasting a rise in the unemployment rate, we’re seeing a subdued pace of growth for GDP, slowing growth in disposable household income and the lowest household saving rate since the global financial crisis (GFC) at just 1.1%.”
“Combined with an expectation that interest rates could hold higher for longer, households are likely to see their budgets further stretched, and more households may fall into acute financial stress.”
Eliza Owen, CoreLogic
Owen forecasted that rental growth would moderate further, but not necessarily decrease.
“In 2024, there are several factors which should support a further deceleration in rental growth. The first is that net overseas migration may start to normalise, as the ‘catch-up’ from overseas arrivals eases and departures increase through 2024.
“Secondly, stretched rental affordability is likely to see a gradual restructuring of rental demand. This includes migration to more affordable rent markets, both geographically and towards more affordable housing types such as units, and an increase in share housing and larger households.
“Thirdly, Australia Bureau of Statistics (ABS) lending data shows investment housing activity has seen a solid increase through 2023, while CoreLogic listings data indicates the rate of investment sales has been normalising. This should add to the supply of rentals in the coming months, helping to ease the rate of growth in rents.
“Finally, as more dwellings associated with the ‘HomeBuilder’ stimulus move to completion, we could see rental demand easing as tenants inhabit their newly built home.”
“Annual growth in rent values has also broadly trended in line with interest rate movements over time, so if there is an easing in monetary policy next year, this will help to stem rent value increases.”
Importantly, Owen stressed that the deceleration of rent hikes may not translate to drops in rental prices.
“Some markets such as Canberra and Hobart have seen distinct falls in rent values through 2023, but even these declines are small relative to the upswing in rents. Hobart rent values fell -3.3% annually, while Canberra rents fell -2.0%.
“However, this follows strong rent value uplifts in both cities in recent years, and in Canberra the pace of decline in rents appeared to be slowing toward the end of 2023.”

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