Welcome to our final update for 2023. Hopefully this report finds you preparing for a relaxing and enjoyable break when you’ll be able to put your feet up and catch up with friends and family.
At this time of year, it’s often interesting to look back at the end of last year to gain a clear picture of where we’ve come from. Funny enough, my Update at that time commented on the fact that property prices were holding up strongly despite the largest interest rate tightening cycle since the early 2000’s due to an ongoing shortage of available property for sale. Sounds familiar, doesn’t it?
The fact is, for the majority of 2023 the ongoing shortage of new listings hitting the market seemed to be having more impact on median property prices than the counter effects of the Reserve Bank’s increases in official interest rates. Data from Corelogic indicates that combined Australian dwelling prices rose steadily throughout the year, including an increase of 0.6% as recently as November. However, there are signs that these monthly increases have been easing since the peak in May of 1.5%.
From our perspective the peak of the market activity-wise probably occurred in September. Confidence among buyers was strong at this point and, whilst the imbalance between supply and demand eased towards November and December, producing more properties being passed-in and requiring post-auction negotiations, well presented properties in the right areas still performed well with the right guidance.
The slowing of price growth towards the end of this year was not unexpected, reflecting a combination of the long-anticipated rise in listing numbers, stretched affordability within the community and the snowballing effect of so many interest rate increases.
The other factor that has had an unexpected impact on the Victorian market is the larger volume of former rental properties being offered for sale as the year went on. In general, this lowered the overall quality of properties that buyers are inspecting, but has helped push rental returns higher which has been good news for investors, as has the increase in incoming immigration numbers.
Given the circumstances; I think the past year has probably exceeded most people’s expectations. We have certainly seen more resilience in property prices than many people may have forecast. I believe we can look forward to a relatively stable and predictable property market in the year ahead, which should enable most Victorians to press ahead with their plans in confidence.
In the meantime, allow me to wish you a safe and relaxing festive season. I look forward to sharing a year full of fresh possibilities with you in 2024.
If you need any advice or assistance on any property-related matter, feel free to give us a call on 9430 0000. We’re always happy to help.