House prices rose 5.5% in 2023, says PropTrack

Interest rates who? According to property watchdog PropTrack – the research arm of realestate.com.au – Australian housing values grew 5.5% throughout 2023, despite housing affordability plummeting to “its lowest level in decades.” 

This defies earlier estimates that property prices would fall this year. In 2022, property prices experienced a downturn due to Reserve Bank rate hikes and inflationary price shocks, but no such slump existed this year. Now, the average home loan size needed to buy has ballooned again. 

So what can the numbers show us? And what do home buyers need to know for 2024?

Strong home buyer interest, population growth, and higher sale volumes primarily drove the impressive capital gains Aussie properties made this year, says PropTrack.

It doesn’t help that the kinds of buyers hunting for homes at the moment aren’t usually affected by interest rate changes: these buyers tend to be on high and/or dual incomes, or can take advantage of family home buying schemes that lower home loan costs. 

However, it’s noteworthy that the total number of properties for sale through 2023 remained relatively low, though this isn’t true for every capital city. Sydney and Melbourne, for example, had far more listings hit realestate.com.au than the decade average. 

On the whole, though, this limited supply bottlenecked keen home buyers and created intense competition that sellers could use to their advantage.

Supply was also constrained by a lack of new home builds, notes PropTrack. Soaring construction costs has slowed down the development of new houses and units, so what limited property listings existed on realestate.com.au were keenly snapped by busy buyers. 

Home value growth didn’t hit all parts of the country equally, either. For instance:

• Capital city prices (6.6%), especially in hot markets like Sydney, rose faster than regional markets (2.8%).
• Nationwide, house prices only increased moderately faster (5.6%) than units (5%).
• Interestingly, units (4.2%) proved more popular than houses (2.5%) in regional suburbs.

Knowing the market you’re buying (and selling it) continues to make a significant difference when it comes to price.

Economists largely agree that the pace and scope of future RBA rate hikes will slow in 2024, so this is an important trend to note from the jump. 

High home loan interest rates eat into borrowing power, especially for first home buyers. But unless inflation takes off again, 2024 is likely to see an even longer interest rate hold than the one in 2023. Buyers who have been waiting for interest rates to settle may have an opportunity next year. 

New tax cuts for high-income earners will also come into effect in July 2024, potentially unlocking greater savings. Given that Australian home buyers now need six figure savings for a home loan deposit, this could give these borrowers an edge. The property market has already proved resilient thanks to this group of buyers; they could be the ones to watch in 2024. 

That being said, PropTrack still warns price growth will be slower in 2024 than 2023, most likely in the 3% to 4% range. Homeowners who want to upgrade or invest in a second property may have a chance to take advantage of their increased home equity, but those looking to buy their first home have a trickier path to navigate. 

Luckily, there are still creative ways into the property market – it just takes a bit of innovation and foresight. Knowing the terrain is half the battle.

Ready to kickstart your property journey in 2024? Crunch your costs using our handy mortgage calculators, and compare low rate home loans in the table below.