Residential Figures Q4 2023, hitting new highs

Prices in Australia continued to show resilience in 2023.

The surge in net overseas migration over the past year has had a significant impact on Australia’s residential markets, particularly rental markets which were already feeling the effects of tightening supply pipelines.

• Nationally, the median house price rose by 1.1% q-o-q to $990,800 while the national median unit price rose by 1.5% to $657,400. Both are closing in on their late-2021/early 2022 peaks.

• The November interest rate rise does seem to have taken a little wind out of performance, particularly in Sydney and Melbourne. The 13 rate increases since May 2022 means we may see a possible increase in distressed sales, although modest gains may still be achieved in the smaller markets, supported by population growth.

• Substantial rental growth has continued across most markets, approaching 30% y-o-y in some cases, while national vacancy in 2023 has settled at circa 1.0%, a 17-year low. Net overseas migration for FY23 totalled 518,100, the highest ever annual total, and 30% higher than was forecast in the May federal budget.

• CBRE estimates the net overseas migration target of 1.135 million over the three years to FY25 translates into demand for 450,000 dwellings, jumping to over 600,000 dwellings when natural increase is factored in. Completions in FY23 totalled under 175,000 (houses and units). With the pipeline slowing further, this suggests new supply will not keep pace with the demand generated, indicating little relief from the tight rental markets for the near future.