A total of $613 billion worth of residential and commercial properties were settled over the last 12 months in Queensland, Victoria, New South Wales, Western Australia, and South Australia.
Combined settlements throughout the calendar year reached 670,883, lower than the two years prior when sales transactions totalled more than 733k in 2022 and 833K during the pandemic boom in 2021.
Despite the downturn, it appears buyers were optimistic about the property market as settlements picked up in the December quarter, which accounted for the bulk or 188,000 of aggregate transactions.
“Although calendar year 2023 saw fewer property transactions than the preceding two years, volumes trended upwards in the second half, culminating in a strong final quarter,” PEXA head of research Mike Gill said.
The highest volume of sale settlements during the year was recorded in December at 66,487.
With inflation trending downwards, paving the way for RBA – which will announce its monetary policy decision later today – to keep interest rates on hold and begin the easing cycle this year, Mr Gill anticipates sales volumes “to recover further” in 2024.
“[Interest rates stabilising] will give buyers more confidence in moving forward with property purchases,” he said.
State policy changes temper the effect of high cash rate
The RBA hiked the interest rate by 25 basis points five times in 2023, bringing the current cash rate to 4.35%.
Though this reduced the demand for property by tightening credit and lowering buyers’ borrowing capacity, many policy changes aimed at increasing housing supply at the state and federal levels helped drive property growth.
- In May 2023, the same month as RBA’s third rate hike for the year, the Victorian 2023-24 Budget announced the abolition of stamp duty for commercial and individual properties to be replaced with an annual tax.
- In August, the National Housing Accord legislation amended its national target for new homes to 1.2 million from 1 million by 2028.
- The Victorian government in September released a new housing statement, setting a target to build 800,000 new dwellings by 2034.
- In November, the same time when RBA hiked the cash rate at its current peak, the Queensland government doubled its existing First Home Owner’s Grant from $15,000 to $30,000.
Queensland is the busiest housing market
Queensland maintained its position as the top-performing housing market for the third year in a row, reporting the highest volume of sales settlement totalling 176,000 in 2023.
Regional Queensland continued to witness higher volumes than Brisbane, where property prices have increased 14.8% from the previous year.
However, the total transactions in the Sunshine State were 9.7% lower than 2022. In fact, all residential settlements in five states declined to 2020 pandemic volumes.
Property sales settlements fell 13.3% in Victoria, 10.2% in WA, 5.8% in NSW, and 4.0% in SA.
NSW spends the most, WA most resilient
NSW recorded the highest spend on residential property in 2023 at over $192 billion, 6.9% lower than the previous calendar year.
Similarly, all states posted declines in aggregate value during the year.
Victoria recorded the largest fall in in 2023, at 13.9%.
WA, on the other hand, was relatively unchanged from the year prior, “showing the strength in that market,” according to Mr Gill.
“WA’s economy benefitted from the resurgence in the mining and agricultural sectors. This saw continued strength in the property market, which had not been experienced since the last mining boom in 2013,” he said.
The state supplies more than half of the world’s seaborne iron ore and lithium. Its resources sector delivered record sales of $246 billion in 2022.
Its capital city, Perth has consistently recorded high settlement volumes and price gains throughout the year. The latest CoreLogic data revealed median dwelling value in the city is $677,000.
Premium segment drives Australia’s residential market
Property price increases widened the gap between settlement volumes of affordable (below $500k) and premium houses (over $1 million), with the latter accounting for the majority of transactions completed in 2023.
In NSW, the proportion of properties that settled valued in the sub $500,000 price band dropped from 22% in the December 2022 quarter to 18.3% in the same period the following year.
In Queensland, the proportion dropped from 44% to 36.7%.
“This was mainly driven by the property prices increasing, particularly in the second half, resulting in fewer affordable properties available for sale in the lower price bands” Mr Gill said.
Property settlement volumes for homes in the $1.5-$2 million and $2+ million price bands also increased in the second half of 2023 (compared to the first half), rising 26.7% and 27.3% respectively in NSW, and 18.9% and 23.5% respectively in Victoria.
Photo by Sora Shimazaki on Pexels
