2023 has been a big year in the Australian property market. After falling -7.5% from a peak in April 2022 to a trough in January 2023, property prices have bounced 8.3% higher over the past 10 months, demonstrating a clear recovery.
In 2023, we saw the Reserve Bank of Australia (RBA) increase the cash rate five times. The Board ended the year by delivering a Christmas reprieve, pausing the cash rate at its final meeting.
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The cash rate will remain on hold for the moment at 4.35 per cent.
Annual inflation was 4.9 per cent in October, down from 5.6 per cent in September. Economists were generally anticipating the October inflation to be 5.2 per cent, so it has slowed down by more than expected.
The RBA board will next meet in February. It would appear there may be further cash rate hikes on the horizon.
“While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected,” RBA Governor Michele Bullock said in a recent statement.
“CPI inflation is now expected to be around 3½ per cent by the end of 2024 and at the top of the target range of 2 to 3 per cent by the end of 2025.”
Major reforms recommended as part of the independent review of the RBA in April will take effect in the new year.
Among the changes, there will be eight monthly meetings to decide on the cash rate, instead of 11.
Many homeowners are now wondering how the changes will affect interest rate decisions and whether there will be larger jumps in the cash rate, given the RBA will have fewer chances to change it.
Home value movements
Housing values continued to rise in November, but the rate of growth slowed. According to CoreLogic, prices crept up 0.6%, the smallest monthly gain since the growth cycle began in February.
Three cities recorded a decline in values over the month. Melbourne and Hobart were both down -0.1%, and Darwin was down -0.3%.
Growth in Sydney home values also slowed sharply, reducing to 0.3%, the smallest monthly gain through the recovery cycle to-date.
Meanwhile, Perth housing values accelerated in November, posting the largest monthly gain since March 2021 at 1.9%. Brisbane (1.3%) and Adelaide (1.2%) also proved resilient.
CoreLogic Research Director Tim Lawless said these three cities continued to show remarkably low levels of advertised supply while purchasing activity was holding above average levels.
“This imbalance between available supply and demonstrated demand is keeping strong upwards pressure on housing values across these markets, despite the downside factors leading to weaker housing market conditions across the lower eastern seaboard,” Mr Lawless said.
“The Melbourne Cup day rate hike has clearly taken some heat out of the market, but other factors like rising advertised stock levels, worsening affordability and persistently low consumer sentiment are also acting as a drag on value growth in some markets.”
| All dwellings | Auctions | Clearance Rate | Private Sale | Monthly home values change |
|---|---|---|---|---|
| VIC | 1162 | 57% | 1124 | ▼ – 0.1% |
| NSW | 1039 | 56% | 1441 | ▲ 0.3% |
| ACT | 79 | 56% | 100 | ▲ 0.5% |
| QLD | 221 | 47% | 1122 | ▲ 1.3% |
| WA | 6 | — | 613 | ▲ 1.9% |
| NT | 2 | — | 21 | ▼ – 0.3% |
| TAS | 2 | — | 150 | ▼ – 0.1% |
| SA | 114 | 71% | 308 | ▲ 1.2% |
* Monthly Home Values figures as of 30 November 2023
* Australian auction results, clearance rates and recent sales for the week ending 3 December 2023
* The clearance rate is preliminary and current as of 8:30 a.m. 4 December 2023
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