‘Pretty extraordinary’: How far property prices rose in 2023

Property prices are ending the year in positive territory, but slower growth and even a period of declines are expected in the new year.

Sydney home values recorded an annual growth rate to the end of November of 10.2 per cent, while Melbourne rose 3 per cent, CoreLogic’s Best of the Best Report for 2023, released on Thursday, found.

Property prices finished 2023 higher.Credit: Simon Schluter

Perth was the strongest capital city at 13.5 per cent growth in home values, followed by Brisbane at 10.7 per cent.

Property values rebounded this year after the steepest downturn in a generation in 2022 when interest rates lifted from rock-bottom levels.

The upswing began as buyers took advantage of cheaper prices to get into the market in the hopes interest rates were close to their peak.

But CoreLogic said it was a thinly traded upswing with an average of about 42,000 transactions a month, compared with more than 48,000 a month the last time the market was rising between July 2020 and April 2022. There were few homes for sale this year and many buyers were wealthier, taking out smaller loans, buying in higher-priced suburbs and using resale profits to fund their next purchases.

“It’s pretty extraordinary to see values get to a new record high despite further uplifts in the rate-hiking cycle,” said CoreLogic’s head of Australian research, Eliza Owen.

“At the start of the year, the market was a lot more exuberant. There was a lot more hope the cash rate would peak at a relatively low level and buyers were really taking advantage of the dip.

“A lot of wealthy buyers saw it as a great buying window. But as we got towards the end of the year, it’s clear the more affordable end of the market emerged as the more resilient and popular amid interest-rate constraints that are much higher than what we thought they would be.”

But Owen noted the late slowdown in the two largest cities as a pointer to what is to come. Sydney home values are flat and Melbourne is down 0.2 per cent on a rolling 28-day basis.

“I expect slower growth – mostly in the Sydney and Melbourne markets — just because I’m extrapolating from trends we’re already seeing,” she said.

“Until you get a shift in monetary policy, I would expect Sydney and Melbourne to be in decline.”

The suburbs that rose most were split between higher-priced neighbourhoods and some more affordable hotspots.

Sydney’s biggest rise was in Bayview on the northern beaches, up 25.3 per cent over the year to November to a median house value of $3.12 million, edging out the popular prestige pocket of Bellevue Hill (up 24.9 per cent to a median $9.73 million).

Price growth could be slower in the new year.Credit: Simon Schluter

A handful of inner west suburbs rose at least 20 per cent, including Hurlstone Park, Dulwich Hill and Lewisham.

In Melbourne, Murrumbeena topped the rankings at 13.2 per cent annual price growth to a median house value of $1.71 million.

Growth of 10 per cent or more was recorded in several middle suburbs across the south and east from Chelsea Heights to Mount Waverley, Mont Albert and Wantirna.

In Greater Brisbane, many of the top suburbs were in the city’s south. Macgregor posted the strongest growth at 24.7 per cent to a median house value of almost $1.18 million, and prices rose more than 22 per cent in Coopers Plains, Salisbury and Wishart.

Perth bucked the trend as more affordable neighbourhoods in the outer south-east took off. Brookdale soared 32.8 per cent to a median house value of only $474,532. Armadale and Hilbert rose at least 30 per cent.

In Sydney’s inner west, Ray White Dulwich Hill director Richie Hrovat said the house market attracted a wealthier group of buyers than the unit market, as well as more visitors at open homes.

“There’s more money in that higher demographic, so it’s a bit more insulated from the effect of higher interest rates,” he said.

He said the inner west attracted buyers as it was family oriented with good transport infrastructure, restaurants and cafes, and pleasant walks along the Cooks River that many locals discovered in lockdown.

Ten or 15 years ago Newtown was the star of the inner west and buyers looked to cheaper options in Enmore, Petersham or Marrickville, but now to get cheaper prices some are moving as far as Canterbury, he said.

In Melbourne, Woodards Carnegie’s Ryan Newbond said Murrumbeena was a tightly held area that consistently attracted strong numbers at open-for-inspections and auctions.

Young families were drawn to the easy access to the CBD and older homes under a heritage overlay that meant their neighbours would not build multi-storey apartments in the future, he said.

“Even over the last three months, a lot of the other areas you’re seeing a bit stagnant in price. Murrumbeena continues to achieve really good results that blow everyone’s expectations,” Newbond said.