Everything you need to know about the state of Australia’s property markets in 20 charts – March 2023 (2023)

Want to know what's happening to the housing markets around Australia?

Well, this monthly collection of charts from CoreLogic paints an interesting picture.

Our property markets had a lot to contend with in the last year, haven't they?

Inflation remains stubbornly high, interest rates rose again in March, there is talk of recessions in many countries around the world, and the war in Ukraine continues with no end in sight and the media keeps scaring us telling us we must brace ourselves for the worst housing correction on record as rising interest rates and recession fears strangle the property market.

By the way... that's not going to happen!

In fact the latest CoreLogic's Home Value Index recorded a sharp reduction in the rate of decline through February, with the stabilisation of housing values coinciding with consistently low advertised supply levels and a rise in auction clearance rates.

The upper quartile of the combined capital city housing market drove this month's stabilising trend, increasing by 0.1% in February. This was most obvious across Sydney's upper quartile, which recorded a 0.7% rise in values over the month.

The combined regionals index is down - 7.7% since June last year, compared with a -9.7% drop in the combined capital cities index, which peaked slightly earlier in April 2022. Regional housing values remain higher than they were at the onset of COVID across every capital city and broad rest-of-state region.

At the same timeAustralia's economic fundamentals remain strong and even though it's slowing down our economy is still growing, however, consumer confidence has taken a significant hit and that's affecting our housing markets with buyers being more cautious and many taking a wait-and-see approach, while sellers have gone on strike not delivering properties to the market for sale.

But despite all this, our housing markets have remained very resilient.

Residential real estate underpins Australia's wealth

• The total value of Australian residential real estate was $9.3 trillion at the end of February 2023 - I remember when this figure was closer to $10 trillion earlier last year.
• However, outstanding mortgages against all residential housing are only $2.2 trillion - a very comfortable 24% Loan to Value ratio.
• 57% of total Aussie household wealth is held in residential property - one of the many reasons neither the banks, the government nor the RBA wants a property crash.

• Dwelling values are down -7.9% over the year and in the three months to February, the change in capital city dwelling values fell 2.3% - now that's not really a crash is it?
• Combined regional property markets also fell 2.1% in the last quarter, and were down 4.2% over the last year.
• The highest annual growth rate in dwelling values among the regional and capital city dwelling markets was across Regional SA, at 13.2%. The lowest change in values was across Sydney, where home values declined -13.4% in the past year.

But within each state, our housing markets are fragmented, and the more expensive sectors of the market which led to the upturn are leading the downturn.

But the upper quartile of our housing markets has always been more volatile.

Our capital city markets are fragmented

• On the one hand, Adelaide property values are up 5.1% over the year, 2.3% below their record highs.
• And Brisbane property values, which were one of the strongest markets during the recent property boom, fell 0.4% in the month of February, and down 6.8% over the last 12 months.

• At the other extreme Sydney house prices are now -13.5% below their record highs recorded in January 2022.

Sales volumes are slowing down

• Sales volumes continue to trend lower as buyer demand slows.
• CoreLogic estimates that in the 12 months to February, there were 486,620 sales nationally, down -21.2% compared to the previous year, but remember, the markets were booming then.
• Monthly sales volumes averaged 37,020 over the past six months, down from an average of 40,155 over the past five years.

We're clearly in a buyer's market

• We've moved from a boom-time sellers' market of 2020-21 into more of a buyer's property market.
• At a national level, properties are taking a little longer to sell.
• In the three months to February, the median days on market was 41, up from a low of 20 days in the three months to November 2021.

• Similarly, vendor discounting has also expanded through 2022. However, in the three months to February, the national median vendor discounting rate contracted slightly on the three months to January.
• In the three months to February 2023, the median vendor discount at the national level was -4.2%. In other words, vendors are really not having to slash their prices, despite what the media tries to tell us.

Here's how many properties are for sale at the moment

• In the four weeks to March 5th 2023, new listings volumes remained low.
• With 38,479 newly advertised properties added for sale, the new listings have seen a seasonal lift.
• New listings volumes remain low relative to previous years, -12.7% lower than its 5-year average.
• At the national level, total listings were fairly steady through the start of January. Advertised stock levels remain low compared to previous years, in part due to the subdued flow of new listings.

• Vendors are a little nervous and discretionary sellers are sitting on the sidelines, but there are still plenty of properties available for sale. The problem is that very few are A Grades or investment grades. Owners of quality properties are holding onto them.

Auction clearance rates start the year strongly

• The combined capital cities' clearance rate for the week ending 5th March is much stronger than the final weeks of 2022, according to CoreLogic. However, auction volumes are still low relative to where they were this time last year.
• We update the weekly auction clearance results here each week.

We're experiencing a rental market crisis in Australia

• Annual growth in rent values held steady on the previous month in February, at 10.1%
• This has partially been driven by growth in unit rents across Sydney, Melbourne and Brisbane, where rents have increased around 14-17% annually.

Finance and Lending

• New housing finance secured in January totalled $ 22.1 billion.
• The value of secured housing finance fell by around $1.2 billion, declining to levels not seen since August 2020.
• Investor finance comprised 35.5% of new mortgage lending through the month of January.
• Housing finance is a "leading indicator" of what's ahead for our property markets - fewer loan approvals mean fewer property purchases moving forward.
• However, finance approvals are still above their pre-pandemic levels

Source of charts: CoreLogic Chart Pack, March 2023.