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Property prices rose by 8% in 2023 - here’s the outlook for 2024

The median value of a home in Australia is now $757,746.

Australian property prices soared by 8.1 per cent in 2023, but the market began cooling in the final months of the year, pointing towards a milder start to 2024.

CoreLogic’s latest Home Value Index (HVI) found this increase more than reversed the 4.9 per cent drop seen in 2022, but was still well below the 24.5 per cent surge recorded in 2021. Five of the eight capitals are still recording values below record highs.

The median value of a home in Australia rose to $757,746 in 2023. In Sydney, the median value increased by 11.1 per cent to $1,128,322. In Melbourne, the rise was 3.5 per cent to $780,457. In Brisbane, values increased by 13.1 per cent to $787,217.

Property
Property prices are set for a milder start to 2024, as high interest rates and weaker economic conditions weigh on values. (Source: AAP)

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December saw the smallest increase in property prices since values started rising in February - up just 0.4 per cent.

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“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 challenges, rising advertised stock levels and low consumer sentiment, have progressively taken some heat out of the market through the second half of the year,” CoreLogic research director Tim Lawless said.

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Home values diverse across capitals

One of the biggest trends of the year was the widening disparity in the rate of home value growth across the capitals.

Perth, Adelaide and Brisbane saw values rise by more than 1 per cent, on average, each month since May. Meanwhile, Melbourne and Sydney saw their pace of growth slow sharply after the June rate hike.

Melbourne values dropped in November and December, while Sydney had a growth rate of just 0.2 per cent in the final two months of the year. Smaller capital cities such as Hobart and Darwin were soft through most of the year.

“Such diversity across the capital cities can be broadly attributed to factors relating to demand and supply,” Lawless said.

“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.

“The cities where home value growth has been lower or negative through the year are showing higher-than-average levels of advertised supply alongside annual home sales which ended the year below the five-year average.”

Capital cities recorded stronger growth compared to regional areas, up 9.3 per cent in 2023 compared to 4.4 per cent. This was a reversal of the pandemic trend, with regional migration trends normalising through the year.

What’s in store for 2024?

CoreLogic expects a “milder outcome” for housing values in early 2024.

“In the first half of 2024, dwelling value growth will be tested by the interaction of high interest rates and weaker economic conditions, both of which are likely to weigh on housing activity,” the report said.

Interest rate movements will be a key factor influencing the property market, with CoreLogic noting that another cash rate hike seems increasingly unlikely.

“A reduction in the cash rate target through 2024 could help to re-stoke demand later in the year,” the report said.

However, it noted that credit availability would likely remain “relatively tight” even if interest rates came down towards the second half of the year.

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