15 min read Welcome to our latest Australian Property Market Update, where we explore the latest trends and factors affecting the property market in 2023.
As one of the largest and most significant sectors in the Australian economy, the property market is constantly evolving and can be affected by a range of factors, such as government policy, economic conditions, and demographic changes.
This guide provides an in-depth analysis of the current state of the Australian property market. It aims to provide valuable insights for home buyers and investors who are looking to navigate the market in 2023.
So, let’s dive in and take a closer look at what’s happening in the Australian property market.
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What's Happening In The Australian Property Market.
While the current state of the Australian property market may not seem very promising, there are still plenty of reasons to remain optimistic.Â
Despite the recent downturn, the market has already shown resilience, bouncing back from significant falls in the past. In fact, other capital cities like Perth and Adelaide have been largely spared from the downturn that has hit Sydney and Melbourne, with Perth emerging as a bright spot in the property market.
Plus, while national property prices are expected to decline between 7% and 10% in 2023, this doesn’t mean that all hope is lost for buyers. The declines are predicted to be most significant in Australia’s most expensive cities, with other regions experiencing more moderate falls. With the right strategy and advice, buyers can still find excellent investment opportunities in these challenging times.
It’s important to remember that property market trends can be cyclical, and downturns often present opportunities for savvy investors to secure properties at a lower price point. So, while the next 6 months may be challenging for some cities in Australia, it’s not all doom and gloom.
Let’s take a look at the market data in some more detail.
Australian Dwelling Values Overview
The Australian property market has experienced some fluctuations over the past year. However, recent data suggest a positive trend.Â
National home values actually increased in the 3 months to May, compared to a decline at the beginning of the year.Â
Over the past 12 months, dwelling values in Australia have fallen by -6.8%, which is lower than the decline in March and April.
These changes present an optimistic outlook for the Australian property market.
Overall changes in dwelling values across Australia
Australian Dwelling Values - Past 3 months
The Australian property market is always evolving, and the latest data suggests that there have been some ups and downs over the past few months.Â
But don’t despair, as there are still some areas of growth that we can celebrate. The 3-month changes in Australian dwelling values present a snapshot of the current state of the market, showing some regions experiencing growth and others experiencing a decline.Â
While there was an overall increase of 2.3% in national home values, it’s worth highlighting that Regional SA has experienced significant growth of 2.8%.Â
It’s also encouraging to see that Regional NT and Regional VIC only experienced modest declines of -1.50% and -1.0%.Â
In the capital cities, there has been an increase in dwelling values for Perth, Adelaide, Brisbane, Melbourne, and Sydney. Canberra, Darwin and Hobart have experienced a decline in dwelling values, but let’s not forget that some cities have experienced smaller declines than others. For instance, Canberra only experienced a decline of -0.10%.Â
Australian Dwelling Values - Past 12 months
The Australian property market is always in a state of flux, with the latest 12-month data showing a mix of growth and decline.Â
Although there has been an overall decline of –6.8% % in national home values, it’s important to note that this is significantly lower than the -7.20% at the beginning of the year.Â
Regional NT’s property market has reset itself with a 0% change in the 12 months to June 2023. Most of the other regional areas are still in decline, but Regional WA has experienced significant growth of 3.5%. The Regional SA market has experienced a remarkable growth of 9.5%, which, though lower than in January, is still truly impressive!Â
Additionally, some capital cities have seen growth, with Adelaide and Perth experiencing growth of 0.4% and 2.0%, respectively.Â
While there have been some declines in dwelling values in capital cities, it’s encouraging to see that Perth has experienced growth of 2.0%%. Hobart has experienced a decline of -12.60%, but it’s worth noting that Darwin only experienced a modest decline of -0.60%.Â
While Brisbane has experienced a significant decline of -9.3%, it’s important to remember that the market is constantly evolving and that there are still areas of growth in the Australian property market.
Median Days On Market
The median days on market statistic provides an important insight into the health of the Australian property market. This metric indicates the average number of days that properties are listed on the market before being sold. As of May 2023, the overall median days on the market for Australia is 34, which is a slight increase from 24 days in February.Â
Additionally, the median days on market for combined regionals is 44, and for combined capitals, it’s 29, up from 27 and 23, respectively. These numbers suggest that properties are taking longer to sell across Australia, both in regional and capital areas.
An increase in the median days on market can signal a softer housing market, where demand is lower than supply. The longer the properties sit on the market, the more likely it is that sellers will have to lower their asking price to attract buyers. This trend could lead to a decline in property prices in the future.
However, it’s important to note that this statistic can also be influenced by other factors, such as seasonality, changes in government policy, and local economic conditions. Therefore, it’s not necessarily an indicator of an immediate downturn or upturn in the property market.
Overall, the decrease in median days on the market across Australia suggests that the property market may be entering a more competitive phase. However, other factors, such as interest rates, government incentives, and population growth, can still affect the market in the short and long term. It’s essential to monitor this metric along with other indicators to get a complete picture of the property market’s health.
Vendor Discount
The average vendor discount is a metric that shows the difference between the original asking price of a property and the final selling price.
A higher discount indicates that sellers are now offering fewer discounts, possibly due to steadily rising demand in the market.
According to recent data from CoreLogic, the average vendor discount has decreased for all regions of Australia from the previous quarter.
In Australia as a whole, the average discount has decreased from -4.30% to -3.8% in the 3 months to May 2023. This indicates that sellers are now less willing to accept lower prices.
However, it is important to note that the discount rate is still relatively low, which suggests that demand for property remains strong in Australia. In conclusion, the decrease in the average vendor discount suggests that the property market in Australia is still relatively healthy, and buyers may still have opportunities to negotiate a better deal.
Mortgage Rates
The Reserve Bank of Australia’s (RBA) recent statement indicates that global inflation is still high but moderating due to lower energy prices, improved supply chains, and tighter monetary policy.
Inflation is forecast to be 4.75% in 2023, followed by 3.0% by mid-2025. GDP growth is expected to slow to 1.5% in 2023 and 2024, and unemployment is projected to reach 4.5% by mid-2025.
The RBA is closely monitoring labour costs, which are rising from recent low rates.
The board expects that further interest rate increases will be necessary over the coming months to ensure that inflation returns to the target rate, and this period of high inflation is temporary.
These factors will impact mortgage rates for the Australian property market.
Market Analysis - Capital Cities
Now that we’ve taken a look at the overall Australian property market let’s dive deeper into the market for the country’s capital cities. The capital cities often hold a significant portion of the property market and are home to many of Australia’s major industries and institutions.Â
The property markets in these cities have seen significant changes, with some experiencing growth and others declining in value. By examining the data and trends for each city, we can better understand the current state of the Australian property market and what it means for homebuyers and investors. So, let’s take a closer look at each capital city and see how they have fared in the past year.
Sydney Property Market
In May 2023, the Sydney property market prices rose by 1.8%. However, affordability remains an issue, and buyers are acting with caution until there is more clarity about when rates will settle.Â
However, confidence in the market appears to be growing, and more investors are recognising that bargains can be found.Â
The rate of decline in property prices is now easing, and the market is expected to reset in 2023. While Sydney’s property market is experiencing slow growth, the long-term fundamentals are strong, creating a window of opportunity to get into the property market before it picks up again later in 2023.
According to a report, property prices are forecast to decline across all capital cities in 2023, with the largest falls expected in Sydney (-8% to -11%). However, some markets have defied the downward trend, and lower listing volumes (fewer properties for sale) are helping protect the market from further downward pressure.Â
Sales volumes of homes priced under $500,000 in NSW sank nearly 35% from 2021, and volumes of dwellings in all price bands fell, with those in the $1 million to $1.5 million range falling the least, with a 2.2% decline.
In the next 6 months, the Sydney property market is expected to increase further, and once buyers and sellers see that inflation is under control and interest rates stop rising, they will step back into the market.Â
The long-term outlook for the Sydney property market remains strong, with a unique lifestyle and economic benefits that will attract overseas migrants and plentiful jobs for highly paid knowledge workers.Â
Rather than trying to time the next property purchase based on where we are in the cycle, taking a long-term view and getting a foothold in the Sydney property market while others are sitting on the sidelines may be an ideal strategy.
Take a deeper look at the Sydney property market
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Melbourne Property Market
The Melbourne property market is experiencing a very modest increase, but there are many reasons to be optimistic.Â
Although house prices fell through 10 of the past 12 months, the rate of decline is now easing, and the market is expected to reset in 2023.Â
In fact, recent CoreLogic data shows that at least ten Melbourne suburbs experienced growth of +14% or higher in the six months to August 2022. However, Melbourne property prices only rose a modest 0.9% in May 2023.
While homes in Melbourne are selling after 30, compared to 27 days last year, there’s still plenty of buyer activity in the market. Looking ahead, while prices are forecast to decline across all capital cities in 2023, the long-term fundamentals of the Melbourne property market are strong.Â
With a forecast median house price of $836,809 and a median unit price of $719,400, there’s a window of opportunity to get into the market before it picks up again.
Brisbane Property Market
While the Brisbane property market may be experiencing a temporary 12-month decline, there are still plenty of reasons to be optimistic. According to CoreLogic’s Home Value Index, Brisbane’s dwelling values have fallen by 9.3% from their peaks in May 2022.Â
However, the city is experiencing a little growth, with the median house price increasing by 1.4% in May… Listings are low across the city, with t the total number of listings decreasing 27.9%suggesting that supply remains pretty tight. Plus, with the 2032 Olympics on the horizon, Brisbane is sure to receive a boost in international recognition and investment, along with an influx of highly-paid knowledge workers.
While it’s uncertain what the next 6 months will bring, there’s reason to believe that the rate of yearly decline will continue to slow. Even though Brisbane property values may fall further in 2023, the market is expected to reset and reach a trough.Â
Once buyers and sellers see that inflation is under control and interest rates stop rising, they will step back into the market. With the population of Queensland expected to grow by over 16% by 2032, the long-term fundamentals of the Brisbane property market remain strong.Â
So, Instead of trying to predict the market cycle, now is a good time to buy property in Brisbane. Don’t wait for others to make a move, take advantage of the current conditions and get ahead of the curve.
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Take a deeper look at the Brisbane property market
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Read More: Brisbane Property Market Update
Adelaide Property Market
Despite the uncertainty of the property market, the Adelaide market has remained relatively resilient to price falls. In fact, the median house value in Adelaide has increased by a whopping 43.4% since the start of the pandemic, reaching $702,392 in January 2023.Â
While there could be a slowdown in 2023, and house prices could fall across Australia, Adelaide is expected to recover to 3% growth by 2025. So, even though QBE predicts that house prices in Adelaide will fall by 8% in 2023, the median house price in Adelaide is expected to recede by only 6% over the next three years, reaching $676,000 by June 2025.
Although the outlook for the next 6 months is uncertain, it’s important to remember that the extent of the falls remains to be seen. While Australian property prices are expected to drop between 7% and 10% in 2023, some experts believe that the falls may not be as severe as expected if the RBA stops increasing rates before the end of the year.Â
Plus, with the Adelaide market remaining resilient to price falls, there’s still plenty of opportunity to take advantage of the current market conditions.
So, while there may be some moderate falls in the Adelaide property market over the coming months, the long-term outlook remains positive. If you’re looking to get into the property market, now may be the perfect time to make your move and secure a property in one of Australia’s most resilient markets.
Perth Property Market
Perth is defying the odds and emerging as a bright spot in the Australian property market, with dwelling values currently at a record high! Despite the downturn affecting the rest of the country, the Perth property market is showing resilience and remains an attractive investment option for buyers.
With low vacancy rates, rising rents, and relative affordability, Perth is becoming a hotspot for investors from eastern states. The Real Estate Institute of Western Australia (REIWA) predicts moderate growth of between 2 and 5 per cent in Perth’s house prices over the next 12 months, making it an ideal time to invest.
While forecasts from some banks predict a decline in the short term, Perth Property Partners’ Director, Rob Walker, is optimistic about the market and predicts continued growth over the next 12 months due to the low level of stock and strong demand from buyers.
Don’t miss out on this opportunity to invest in Perth’s resilient property market.
Hobart Property Market
It’s important to remember that while the Hobart housing market has recently experienced a decline in house prices, it’s not all bad news.Â
The average sale price of a home in Hobart as of May 2023 is still a solid $815K, which is nothing to sneeze at. Moreover, this price decline presents a great opportunity for savvy investors to enter the market at a lower price point.Â
If you’re thinking of investing in Hobart, there are certain suburbs that you should definitely consider. West Hobart, North Hobart, and South Hobart are all areas that are still showing strong growth potential, despite the broader decline in prices.Â
By taking a closer look at these areas, you may be able to find some great opportunities that will help you build wealth over the long term. So, while the next 6 months may be challenging for some cities in Australia, there are still plenty of opportunities to be found in Hobart for those who are willing to put in the effort.
Darwin Property Market
Looking to invest in property? Darwin could be your answer! While the Darwin property market has experienced a small decrease in median house prices over the past 12 months, in May 2023, house values rose by 0.4%.
It is still considered Australia’s most affordable capital city, with a median dwelling value of $550,000.Â
Even more encouragingly, the city has been performing well over the past year, with a modest decrease in housing value of just -0.6%. Plus, with median weekly house rents increasing by 4.2 annually, it’s a great time to invest in property in Darwin.
Looking ahead, the outlook for the next 6 months is positive, with the Darwin property market expected to level off rather than drop by as much as forecast for other cities.Â
While there may be further falls in home values through the late months of 2023, it is predicted that housing prices will stabilise after interest rates find a peak.
Darwin has a lot going for it, including a low-density population and a relaxed lifestyle. The city has seen an uptick in interest from investors and homeowners. Therefore, if you’re looking for a smart investment opportunity with positive long-term prospects, Darwin’s property market is definitely worth considering!
Canberra Property Market
Despite a 12-month decline of -8.8% in dwelling values, there is still hope in the Canberra property market!Â
House prices increased by a small but encouraging 0.4%, and unit prices increased by 9.4%. Moreover, the strong auction clearance rates throughout the year have been another sign of the strength of the Canberra property market.Â
There are also still government incentives to encourage first-home buyers into the market. While there may be some decline in the short term, the outlook for the next 6 months in the Canberra property market is bright.
Looking to buy a property anywhere in Australia? Here are your next steps
If you’re looking to buy a property anywhere in Australia, Hunter Galloway has you covered. Our team of experienced brokers can help you navigate the often complex and overwhelming process of buying a home, no matter where you are in the country.
With our help, you can secure the best possible loan for your unique financial situation and take advantage of the current market conditions. Don’t hesitate to take the first step towards your dream home. Call us today at 1300 088 065 or get a free assessment.
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If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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