Property outperforms shares in 2023

January 8, 2024

In 2023, Australian home values surged by 8.1%, slightly outpacing the Australian share market's increase of 7.8%.

The 8.1% upswing in 2023 marks a noteworthy rebound from the preceding year's decline of -4.9%. Perth notably led the surge in 2023 with an impressive 15.2% rise, followed closely by Brisbane, where dwelling values increased by 13.1%.

CoreLogic reports that dwelling values in Perth, Adelaide, and Brisbane have consistently risen by more than 1% each month on average since May.

Tim Lawless, CoreLogic’s Research Director CoreLogic said, “In Perth, Adelaide and Brisbane, housing affordability challenges haven’t been as pressing relative to the larger cities and advertised supply levels have remained persistently and substantially below average. 

Capital cities have generally recorded stronger growth conditions relative to regional areas. Across the combined capital cities index, dwelling values were up 9.3% in 2023, more than double the 4.4% rise recorded across the combined regional index. 

“Stronger conditions across capital city markets is a reversal of the early COVID trend which saw regional markets experience higher demand amid strong internal migration. Regional migration trends have mostly normalised through 2023,” Tim said. 

Shane Oliver, AMP's Head of Investment Strategy and Chief Economist, credited the resurgence in 2023 to several factors. These included a shortage of available properties against a backdrop of surging immigration, and a cohort of buyers less sensitive to interest rate fluctuations seeking to take advantage of 2022’s price falls. The economist suggested more buyers leaned on “the bank of mum and dad” in 2023, while “some renters seeking to buy rather than pay significantly higher rents, the strong jobs market helping to minimise mortgage stress and a fear of missing out.”

Angus Raine, Executive Chairman of Raine & Horne, highlighted how the 2023 results illustrated the enduring strength of Australia's preferred asset class. Looking ahead, Angus also noted that while 2024 is officially the year of the dragon, it could witness a significant surge in investor activity. 

REA Group indicates that historically low vacancy rates stand as a primary driver that will prompt more investors to re-engage with the property market in 2024. Angus added, “With such low vacancy levels, rental properties are poised to attract tenants, ensuring a steady cash flow for landlords.”

“Moreover, the remarkable 14% surge in rents across Australia's major cities in 2023 further underlines the appeal of property as an investment class in 2024.”