The higher cost of borrowing and a lack of available houses on the market may have hampered home buyers throughout 2023, but it hasn’t significantly slowed demand and the growth in property prices.
“It was a surprise, given that it was largely expected to be the year that rapid rate hikes continued to hit housing demand and would impact price growth negatively,” said Dr. Nicola Powell, Domain’s chief of research and economics.
In 2023, house and unit prices grew steadily in every month throughout the year, with a national annual growth rate of 5.42% (and 6.54% in capital cities) according to recent data from PropTrack. The main drivers include increased immigration after Covid and stronger demand for established homes due to the construction industry facing higher costs and less capacity.
A change in momentum may be on the horizon. While most experts believe demand for housing will continue to outstrip supply, Australia’s high cost of living will keep biting—leading to weaker price growth and mixed results across different parts of the country.