Cost of living hits capital cities hard
2023 ended with slow growth across Australia’s housing market, and some cities struggled more than others.
CoreLogic’s national Home Value Index (HVI) rose just 8.1 per cent in 2023, a far cry from the massive growth rates of 2021.
Over December 2023, home values nationwide lifted a mere 0.4 per cent, making this “the smallest gain in our monthly HVI since values started rising in February”, according to CoreLogic research director Tim Lawless.
“After monthly growth in home values peaked in May at 1.3 per cent, a rate hike in June and another in November, along with persistent cost-of-living pressures, worsening affordability, rising advertised stock levels and low consumer sentiment, have progressively taken some heat out of market through the second half of the year,” Mr Lawless stated.
The uneven impacts of cost-of-living pressures across the nation’s capital cities led to substantial disparity in growth rates from market to market.
Variation was the name of the game in 2023, with growth rates ranging from a 15.2 per cent uptick in Perth to a -1.6 per cent drop in regional Victoria.
The country’s strongest markets were Perth, Adelaide and Brisbane, each of which recorded a home value increase of over 1 per cent each month since May.
In contrast, Melbourne and Sydney saw a sharp drop in the pace of growth since June’s rate hike, with Melbourne seeing declines towards the tail end of the year.
The weakest housing markets were the smaller capital cities of Hobart and Darwin, both of which recorded an annual decline.
Mr Lawless explained: “Such diversity across the capital cities can be broadly attributed to factors relating to supply and demand.
“In Perth, Adelaide and Brisbane, housing affordability challenges haven’t been as pressing relative to the larger cities, and advertised supply levels have remained persistently and substantially below average.”
Market conditions were bleakest across regional Australia, with CoreLogic data finding that the combined capitals rose 9.3 per cent in 2023, more than double the 4.4 per cent rise seen in the combined regional index.
Mr Lawless attributed this downswing to a reversal of the COVID-19 regional exodus, noting that “regional migration trends have mostly normalised through 2023”.
Looking forward into the coming year, CoreLogic forecasted “a milder outcome for housing values in early 2024, with the potential for a year of two halves”.
CoreLogic concluded that “the trajectory of interest rates through 2024 will be a key factor influencing housing trends”.
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