Australia Property Market

The Australia property market has seen significant growth in recent years, with dwelling prices increasing by around 7 per cent in 2023. However, the performance across housing markets in the country has been mixed. Looking ahead to 2024, experts predict a more modest rise in house prices.

Surprisingly Strong Growth in 2023

House prices across Australia experienced a surprising bounce back in 2023, with annual growth of around 7 per cent, which is close to the long-term average. This growth was seen across both houses and units, following a period where standalone houses outperformed units in 2020 and 2021, but underperformed in 2022.

Mixed Performance Across Market Segments

While overall house price growth was strong, there was more variation across disaggregated market segments. Queensland, South Australia, and Western Australia saw strong growth in their housing markets. Sydney experienced robust growth in dwelling prices, while regional New South Wales saw less significant increases. Melbourne and regional Victoria had modest growth, while the markets in Tasmania, Northern Territory, and Canberra were soft.

Dwelling Price Change in 2023

Here is a breakdown of the annual percentage change in dwelling prices by city and region for 2023:

Sydney

Houses: 13%
Units: 8%

New South Wales

Houses: 3%
Units: 2%

Melbourne

Houses: 4%
Units: 3%

Victoria

Houses: 0%
Units: 0%

Brisbane

Houses: 12%
Units: 14%

Queensland

Houses: 11%
Units: 13%

Adelaide

Houses: 9%
Units: 12%

South Australia

Houses: 12%
Units: 8%

Perth

Houses: 19%
Units: 14%

Western Australia

Houses: 11%
Units: 16%

Hobart

Houses: -1%
Units: -4%

Tasmania

Houses: 1%
Units: 2%

Darwin

Houses: -1%
Units: -4%

Northern Territory

Houses: -1%
Units: -8%

Canberra

Houses: 1%
Units: -1%

Long-Term Performance

The differences in dwelling price performance between regions can have lasting effects. Over the past five years, Melbourne, Perth, and Darwin have underperformed compared to the capital city average, while Adelaide, Canberra, and Hobart have performed better. Looking at the past 10 years, Perth and Darwin have continued to underperform, while Sydney and Hobart have seen the most growth.

These variations in performance can be attributed to differences in economic performance and valuation. Hobart’s strong performance can be attributed to its lower starting house prices compared to other capitals and a decent local economy. On the other hand, the decline in the Perth and Darwin markets can be attributed to the end of the mining boom, which previously drove growth in those areas.

Over a 20-year period, the difference in house price performance between capital cities has been relatively modest, with Hobart consistently leading the pack. This even performance over a longer timeframe may be attributed to the similar impact of fiscal and monetary policies across the states.

Factors Influencing House Price Outcomes

Inter-state population movements are driven by the performance of regional job markets and differences in housing affordability. These factors tend to even out house price outcomes over a long period of time.

Annualised Price Growth by Capital City

Here is a breakdown of annualized price growth by capital city over different timeframes:

5 years

Sydney: 7.2%
Melbourne: 3.8%
Brisbane: 7.8%
Adelaide: 8.3%
Perth: 4.2%
Hobart: 9.6%
Darwin: 3.2%
Canberra: 7.9%
Average: 7.5%

10 years

Sydney: 7.6%
Melbourne: 5.7%
Brisbane: 5.6%
Adelaide: 6.1%
Perth: 1.6%
Hobart: 7.6%
Darwin: 1.0%
Canberra: 6.8%
Average: 5.7%

20 years

Sydney: 5.6%
Melbourne: 5.8%
Brisbane: 5.9%
Adelaide: 6.1%
Perth: 5.6%
Hobart: 7.9%
Darwin: 5.6%
Canberra: 5.8%
Average: 5.8%

The relatively consistent performance of house prices across capital cities has been a feature of the past 40 years. The proportionate difference between Sydney and other capital city house prices tends to fluctuate around a stable average, with cyclical movements reflecting changes in regional economic and house price valuation differences.

The markets in Perth and Darwin differ from the other capital cities due to their greater distance from the major population centres on the East Coast and the greater importance of the mining industry in Western Australia and the Northern Territory economies.

In conclusion, the Australia property market has experienced strong growth in recent years, with a surprising rebound in 2023. However, the performance has been mixed across different housing markets. Looking ahead to 2024, experts predict a more modest rise in house prices, with Melbourne and Perth expected to be the best-performing regions. The long-term performance of the housing market is influenced by economic factors and valuation differences. Overall, the Australia property market has shown consistent growth over the past few decades, with variations between capital cities and regions.