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All data and commentary within this article are sourced from CoreLogic.1
November saw Australia's property downturn ease slightly again, paving the way for a more moderate market in the new year.
The latest CoreLogic report detailed the smallest national price dip since June as listings remained well below average and interest rate hikes continued at a softened rate.
What comes in 2023 will largely depend on when rates peak, though. So what's in store?
The median Australian property fell in value by -1.0 per cent last month, making it the mildest drop in close to six months. Results were once again mixed across the capital cities, though.
Price declines remained consistent in Sydney and Melbourne, matching October's figures of -1.3 and -0.8 per cent drops respectively.
The latest declines are significantly smaller than each city's worst months. By comparison, the median home price in Sydney fell by -2.3 per cent in August, while Melbourne slumped -1.5 per cent in July.
Brisbane's late-onset downturn continued for another month with a further -2.0 per cent correction. Adelaide, meanwhile, held strong with only a -0.3 per cent dip for November.
Perth and Darwin were also more or less flat for the month. Hobart and Canberra, on the other hand, were down -2.0 and -1.2 per cent respectively.
More affordable property options proved safer bets once again, with national unit prices declining at around half the speed of houses.
Regional Australia also demonstrated a refreshed resilience. The combined regional markets dropped by -0.9 per cent in November, compared to a -1.4 per cent fall the previous month.
"Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off," CoreLogic's research director Tim Lawless said.
While the market is steadying, he added that "it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched."
Low stock on the market has been a consistent trend throughout 2022. That shortage of available homes is one of the core reasons property values haven't crashed.
CoreLogic's report described the spring selling season as being "mild" as new listings have been especially low for the time of year.
In the capital cities, new November listings were -30.8 per cent down on the same period in 2021 and held back -14.2 per cent from the five-year average.
That lack of seasonal uplift has driven total listings on the market down -19.3 per cent below the five-year average, so homes are in unusually low supply.
"Across the capitals, total listings haven’t been this low at this time of the year since 2010, and regional listings are at their lowest level since 2007," Mr Lawless explained.
"This is likely a key factor offsetting the negative impact of higher interest rates and low consumer sentiment."
Sales results show buyer demand also dropping below average levels, although this hasn't happened to the same degree as it has with supply.
Home sales in the three months to November were down -1.6 per cent on the five-year average.
The most marked easing in November's price corrections happened in regional Australia. The combined regional markets saw a -0.9 per cent drop last month compared to the -1.4 per cent registered in October.
South Australia in particular delivered strong growth for the month, getting a full +1.0 per cent boost, with regional Western Australia close behind on +0.9 per cent.
The other states and territories saw regional homes improve on their October results, suggesting that regional Australia may have turned a corner in the downturn.
Eleanor Creagh, PropTrack's senior economist, explained to InDaily that "we’ve moved into the next stage of the property cycle faster than some expected," adding that "regional home prices are so far holding up stronger than capital cities."
Some of the factors bolstering regional markets include relative affordability, an ongoing shortage of listings, and the persisting sea- and tree-change trend for remote workers.
Since interest rates began rising in May, the housing market has been hit hard by negative sentiment and fear-inducing headlines.
According to BuyersBuyers co-founder Pete Wargent, the worst of that negative mindset is now over, and people are beginning to transact with more confidence.
"There’s no question that the series of interest rate hikes knocked the stuffing out of the housing market earlier in 2022," he said.
"That, combined with improved auction clearance rates, indicates that the market is more balanced, especially when it comes to high-quality properties in popular areas."
The alleviation has been helped by the Reserve Bank's slowing of its monthly rate hikes, with the latest 0.25 per cent increases suggesting that the peak of the cycle is approaching.
"After months of gloomy headlines, eventually consumers tend to tire of hearing the same old messages and move on, particularly in the absence of a major property price correction, and a lot of buyers are doing just that now," Mr Wargent said.
"At some point, you just have to choose to get into the market."
As has been the case for most of 2022, interest rates remain the key factor that will shape the coming months in the property market.
The Reserve Bank's decision to slow rate increases in October could be an indicator that the peak of the tightening cycle is just around the corner, however predictions are still wide-ranging.
Mr Lawless warned that, "if interest rates move materially beyond 3.1 per cent, it is reasonable to expect a more substantial rise in mortgage distress, especially when considering the high cost of living pressures."
Low unemployment and a strong economy, though, "will be the key safety net helping to keep a lid on defaults," and the majority of Australians are ahead on mortgage repayments with elevated savings as a safety net.
The most likely scenario, the CoreLogic report said, will be to avoid a surge in distressed sales. With listings remaining historically low, any "reacceleration" of the market downturn should be avoided.
SQM Research recently released a range of possible scenarios for 2023 that forecast anything from double-digit price growth to -6 per cent declines for the year.
The path the market goes down depends largely on where the cash rate peaks, so all eyes will be on the RBA in the new year.
1. CoreLogic Research News, 'CoreLogic Home Value Index: National dwelling values fell -1.0% in November, the smallest monthly decline since June', 30 November 2022
https://www.corelogic.com.au/news-research/news/2022/corelogic-home-value-index-national-dwelling-values-fell-1.0-in-november,-the-smallest-monthly-decline-since-june
2. InDaily, 'SA bucks trend as regional property boom deflates across Australia', 21 November 2022
https://indaily.com.au/news/business/2022/11/21/sa-bucks-trend-as-regional-property-boom-deflates-across-australia/
3. BuyersBuyers, 'Housing market passes “peak fear” phase', 10 October 2022
https://buyersbuyers.com.au/articles/housing-market-passes-peak-fear-phase
4. ABC News, 'Will house prices go up in 2023? The answer largely depends on interest rates', 29 November 2022
https://www.abc.net.au/news/2022-11-29/house-prices-to-rise-if-conditions-favourable/101705690
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