SYDNEY: Australian home prices rose last year, a significant turnaround from the 5.0 per cent dip seen in 2022, but interest rate hikes and persistent cost of living pressures have somewhat slowed the pace of growth through the final months of the year.
Figures from property consultant CoreLogic out on Tuesday showed prices nationally jumped 8.1 per cent in 2023, but well below the 24.5 per cent surge recorded in 2021. Prices in December nudged higher by 0.4 per cent, the smallest monthly gain since February.
Sydney boasted a 11.1 per cent annual rise but were still 2.1 per cent below their January 2022 peak, with a median home value of just under A$1.13 million (A$769,530).
Most other cities surged, with Perth up 15 per cent and Brisbane 13 per cent, while Melbourne prices rose only 3.5 per cent.
But CoreLogic analysts said along with higher rates and inflation, affordability challenges, rising advertised stock levels and low consumer sentiment have taken some heat out of the market through the second half of last year.
That is expected to continue into the first half of 2024, CoreLogic Research Director Tim Lawless said in a research note.
The Reserve Bank of Australia (RBA) had in November hiked rates by a quarter point to 4.35 per cent amid worries inflation expectations could become un-moored. It has jacked up interest rates by a whopping 425 basis points since May last year.
Australian households are under broad financial pressure from high inflation, which spiked as high as 7.8 per cent last December, before slowing to 5.4 per cent in the third quarter, but RBA believes the vast majority of borrowers can service their mortgages.
The trajectory of interest rates through 2024 will be a key factor influencing housing trends though data suggests another hike was "looking increasingly unlikely", Lawless said, adding any rate cuts could help stoke demand later in the year.
"If interest rates do move lower, there is a good chance we will see a lift in consumer sentiment and a more positive trend in housing activity and values through the second half of the year." (A$1 = 1.4684 Australian dollars) - Reuters