Home values have remained resilient to higher interest rates this year, and this continued in November with prices continuing to lift and hitting fresh record highs in many markets, although the pace of growth has slowed due to the increase in properties coming to market.
Earlier this year national home prices reclaimed 2022’s price falls in their entirety, with the upswing continuing in November as national home prices climbed 0.22% month-on-month to set another fresh record, bringing them up 5.53% so far this year and 1.29% above their previous peak recorded in March 2022.
This spring has been busier than last, buyer and seller confidence is buoyant, and choice has improved significantly in the major capitals which saw the pace of growth slowing. Although the flow of new listings hitting the market has risen, demand for housing has remained strong and home prices have continued to move higher, albeit at a slower pace.
November marked the eleventh consecutive month of national home price growth. After falling 4.02% from March 2022 to December 2022 national prices are now up 5.53% from the low point recorded in December 2022, to sit 1.29% above their previous peak and 5.42% above their levels a year ago.
Download the PropTrack Home Price Index - November 2023 report in full
National home prices increased 0.22% in November, marking their eleventh consecutive increase, the longest period of consecutive monthly growth since the pandemic boom which saw 23 consecutive months of growth from May 2020 to March 2022.
This continued lift means prices nationally have grown 5.53% since their low point in December 2022, reversing the fast falls seen in 2022 in their entirety, to now sit 1.29% above their previous peak recorded in March 2022 and 4.54% above their year ago levels.
This year strong housing demand, buoyed by record net overseas migration, tight rental markets, low unemployment and for existing homeowners substantial home equity gains of recent years, has worked alongside limited housing stock to offset the impacts of higher interest rates.
In the first half of this year stronger housing demand and a limited availability of properties listed for sale underpinned the initial phase of the home price turnaround and subsequent recovery.
This spring has been busier than last, buyer and seller confidence is buoyant, and choice has improved significantly in the major capitals which saw the pace of growth slowing. Home price growth slowed from October’s faster pace in every market except regional SA, Darwin, and regional NT.
Although the volume of new listings hitting the market has increased in recent months housing demand has remained strong and prices have continued to rise, albeit at a slower pace. At the same time, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing.
The positive tailwinds for housing demand and a slowdown in the completion of new homes continue to counter the sharp deterioration in affordability and slowing economy.
In Sydney and Melbourne increasing confidence amongst sellers has seen the flow of new listings surge, improving choice for buyers. Despite the uplift in the number of properties coming to market, home prices moved higher in November, with the uptrend now firmly entrenched as strong demand and positive sentiment see prices continue to lift.
Choice for buyers remains limited in Brisbane, Adelaide, and Perth, heightening competition and seeing prices hit fresh peaks in each of these markets in November.
Capital city markets have led 2023’s price upturn while regional areas have seen slower growth.
This continued in November, and although prices in both markets reached fresh peaks capital city markets saw stronger growth with prices rising 0.26% while regional prices rose 0.12%.
Capital city markets, with the exception of Brisbane, Adelaide, and Hobart, outperformed their regional counterparts on a monthly basis in November.
Prices in the capitals are up 6.62% year to date, compared to 2.76% for regional areas. Though capital city markets have taken the lead in 2023, prices held up better for much of last year in the regions. And regional areas also experienced exceptionally strong growth during the pandemic. Home prices in regional areas are still up 49.75% since March 2020, while home prices in the combined capitals are up 32.03% over the same period.
All capitals, except Darwin (-0.12%), saw prices rise in November. Perth continued its streak of outperformance, and prices rose 0.74% month-on-month, making home price growth in Perth the strongest capital through the month. After Perth (+0.74%), Adelaide (+0.34%), Sydney (+0.32%) and Canberra (+0.32%) led gains through the month.
The pace of growth slowed in November, but Sydney prices continued to push to fresh record highs. Home prices in Sydney have now risen for twelve straight months and are 8.40% above their levels a year ago to sit 1.00% above their previous price peak recorded in February 2022 with prices increasing 0.32% in November. Prices in Sydney are now up 8.27% year to date.
With the increase in the number of properties hitting the market, Melbourne home price growth slowed in November, with prices climbing just 0.04% month-on-month. This bring prices up 1.39% from their level a year ago. Even so, prices in Melbourne remain 3.71% below their peak in March 2022. Compared to their low point in January 2023, home prices are up 1.92%, this means the price recovery in Melbourne is lagging Sydney, Brisbane and Canberra but remains ahead of the recovery seen in Hobart.
Home prices in Brisbane have risen at a fast pace this year regaining all of 2022’s price falls. The pace of growth slowed in November, but prices still climbed 0.20% to hit a new price peak. Prices are now 8.85% above their level a year ago and up 8.91% year-to-date.
Perth and Adelaide continue to be the strongest performing capital city markets over the past year, with prices up 12.76% and 9.74% respectively in both cities over the past year, and prices at fresh record highs in both markets. The relative affordability of both cities homes, population growth, and very tight rental markets are supporting home values, while low stock levels are intensifying competition amid strong buyer demand resulting in a sellers’ market with home prices in both capitals continuing to rise at a fast pace, even after bucking the falling price trend seen in most markets for much of last year.
At the other end of the spectrum Hobart remains the weakest performing market when comparing annual price growth and change from peak, with prices down 6.63% from their March 2022 peak after rising a small 0.03% in November. However, this comes after several years of outperformance as well as strong growth during the pandemic. Home prices in Hobart are still up 37.93% since March 2020.
Prices for detached houses nationally grew 0.26% in the month; unit prices grew 0.03%. House prices have grown more quickly over the past year and are now 5.52% higher than a year ago, while unit prices are up 4.96% on their year ago levels.
Markets in parts of WA, SA and Queensland continued to be the top-performing areas over the past year, recording growth in prices of 10% or more. These markets have largely avoided the downturn in prices, due to a combination of factors: more affordable homes, population growth, and – particularly for Perth – very low stock on market. In Perth, the total number of properties currently listed for sale is at record lows.
Within Sydney, inner city areas have the strongest rebound in prices compared to a year ago; that reverses the pattern seen earlier in the downturn, when more-affordable peripheral areas were holding up better.
The story is fairly similar in Melbourne; however, prices in the inner Melbourne region have not performed as well as prices in the east, or, particularly, the inner east.
This year home prices have remained resilient to the higher interest rate environment and this continued in November with national home prices setting another record, although the pace of growth has slowed with the lift in properties coming to market.
Home prices fell at a fast pace in many markets in 2022 when interest rates were first rising, though those falls have now entirely reversed in many markets and prices hit fresh record highs in many markets in November.
Strong housing demand, buoyed by record net overseas migration, tight rental markets, low unemployment and home equity gains of recent years, has worked alongside limited housing stock to offset the impacts of higher interest rates.
Earlier this year the turnaround in home prices was underpinned by the subdued listings environment that meant buyers were competing for fewer properties. However, although the volume of new listings hitting the market has increased in recent months, the positive tailwinds for housing demand have remained.
At the same time, the sharp rise in construction costs, compounded by costly delays arising from labour and materials shortages, has slowed the completion of new homes hampering the supply of new housing.
Limited housing supply relative to demand is continuing to offset the substantial interest rate tightening already delivered and deterioration in affordability.
Further, continued low unemployment and resilient labour market conditions remain a contributor to the sustained strength in market conditions. Eleven months of price rises that have gathered traction across markets alongside more positive market conditions are also maintaining expectations of positive future growth.
Looking ahead, although there is a risk interest rates rise further, they are close to if not already at their peak and while the outlook for the economy is weaker, population growth is set to continue rebounding strongly. Together with the housing shortfall and continued challenging conditions in the rental market, prices are expected to continue to rise despite affordability remaining stretched.
However, price growth is expected to slow from the above average growth seen in 2023 as the positive tailwinds for housing demand and a slowdown in the completion of new homes, counter the sharp deterioration in affordability and slowing economy with easing effect, seeing the pace of growth slow in 2024.
Methodology: The PropTrack Home Price Index measures the monthly change in residential property prices across Australia to provide a current view on property market performance and trends. PropTrack Home Price Index uses a hybrid methodology combining repeat sales with hedonic regression. The repeat sales method matches resales of the same property while the hedonic regression estimates values based on the value of similar properties. The hybrid model allows two properties in the same Australian Bureau of Statistics Statistical Area 1 (SA1) region, of the same type, to be matched and controls for differences in property characteristics, as in a hedonic regression. The PropTrack Home Price Index is a revisionary index with the whole back history updated monthly with current transaction information.
** This report uses realestate.com.au internal data and data sourced from third parties, including State government agencies. It is current as at the time of publication. This report provides general information only and is not intended to constitute any advice and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the ’PropTrack Home Price Index Report – November 2023’. See report for Copyright and Legal Disclaimers.
