Property 2023: A Year of Surprises and Dominance in Perth Real Estate

Scott Kuru December 20, 2023 5 min read

KEY POINTS

House and unit price growth in affordable areas of Perth dominates CoreLogic’s end-of-year report
The report also points to strong rental growth in areas impacted by record migration
CoreLogic says home price growth is slowing, and that’s likely to continue into 2024

With just days to go before the end of the year, most of the major property analytics firms have released wrap-ups in 2023, looking back at the last 12 months and casting forward to 2024.

Domain dubbed their 2023 end-of-year summary “The year that surprised everyone”, while Neoval commented that while it’s surprising “given rapid rate increases” that Australian home prices are now well above their previous peak, “the growth reflects strong population growth and a housing shortage.”

CoreLogic has now released their look-back, dubbed “The Best of the Best 2023”.

“The pressure of climbing interest rates, stretched affordability, and the 'fixed rate cliff' stress tested the housing market through 2023, however, resilience largely prevailed,” according to the report’s author, CoreLogic’s Head of Research, Eliza Owen.

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CoreLogic’s Home Value Index shows that as of the 23rd of November, national residential prices had rebounded to reach a new record high, recovering 8.3% from a -7.5% trough in January.

The nitty-gritty…

There’s plenty of “wow” factor in the Best of the Best report, like the most expensive home sale of the year - $76,000,000 paid in May for 23-24 Victoria Road, in the exclusive Sydney suburb of Bellevue Hill.

Bellevue Hill is also - on average - the most expensive place to buy a house in Australia, while nearby Point Piper is the dearest area in which to purchase an apartment.

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Unsurprisingly, flood-ravaged Rochester in northern Victoria has seen the strongest 12-month decline in house prices.

But it’s pretty stunning that the greatest increase in annual house values (34.2%) has come in a place where homes have only just started springing up.

That’s Tralee - a new development south of Queanbeyan in New South Wales, that’s right on the border with the ACT.

For units, the star performer was Slacks Creek (up 27.4%) near Logan on Brisbane’s sprawling south-eastern outskirts.

Investors, take note!

CoreLogic says The Best of the Best 2023 report clearly shows some of the effects of what it describes as the “staggering levels of net overseas migration” the country has seen over the past 18 months.

It points to Kensington in Sydney’s Eastern suburbs, which saw the highest house rent growth in the year to November, up 24.9%.

“ “No doubt this was in part due to high demand from international students seeking proximity to the UNSW (University of New South Wales) Kensington campus”

CoreLogic’s Head of Research, Eliza Owen

“No doubt this was in part due to high demand from international students seeking proximity to the UNSW (University of New South Wales) Kensington campus”, writes Eliza Owen.

As for units, “Lakemba in Sydney’s Inner South West saw the strongest rent increases nationally at 28.1%.”

“The Inner South West of Sydney has historically accounted for around 16.9% of net overseas migration to Sydney, and 5.4% of net overseas migration nationally.”

The report also shows the highest rental yields in Australia come in boom mining areas of Regional WA, where accommodation is in short supply.

Look west

But it’s property in Perth that dominates much of The Best of the Best 2023, particularly when it comes to houses.

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“What I found really interesting about the results this year is that some of the more affordable markets have definitely risen to the top of the capital (city) growth league tables”, Eliza Owen says.

“For example, across the capital city house markets, the strongest performers over the year were Brookdale, Armadale and Hilbert.”

“So these are all house markets of southeast Perth, where the median value is less than $550,000.”

“Gross rent yields are pretty good at about 6% and the capital growth rate over the past year in these markets was over 30%.

“So there's a transition away from demand in the more aspirational (or expensive) markets to the markets where you're going to get the most bang for your buck and realize value and capital growth potential in more affordable segments of the market.”

Perth also scores highly in the capital city apartment market growth stakes, taking out 5 of the top ten spots, with Brisbane on 4 and Adelaide with 1.

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The outlook

CoreLogic points out that despite the surprise bounce-back in national home values this year, “the pace of increases slowed gradually from June, and market conditions have deteriorated more notably through November,” including a -0.1% fall in Melbourne and a decline in the monthly growth rate in Sydney, to 0.3% (down from 0.7% in October).

Less homes are changing hands, and the auction clearance rate across the capital cities has also declined.

“2024 is likely to see a continuation of this trend,” the report says.

As for renters, Core Logic says rent growth may slow in 2024, but points out that “a slowdown in the rate of rent increases does not necessarily mean rents will fall.”

Eliza Owen also says that high home value growth in “affordable” suburbs in places like Perth is also likely to continue.

“I think this is something we'll see into the start of 2024 as well, where you've got high interest rates coming up against slowing economic conditions,” she says.