Welcome to CoreLogic’s housing market update for December 2023.
Housing market sentiment and confidence continues to moderate as pace of monthly house price growth slows.
Credit access and interest rates emerging as bigger impediments for homebuyers, and construction costs more problematic for new developments. NAB has revised down dwelling price forecasts – with expected rate hikes now coming sooner a turning point in prices is expected to begin in late-2022.
The NAB Residential Property Index eased further to +59 pts in Q4 but continues trending well above average (+16 pts). Sentiment was highest in the NT and lowest in VIC despite a small uplift. Market confidence also inched down with the short and long-term measures falling for the third straight quarter to +56 pts and +47 pts respectively. Confidence levels are now highest in the NT and ACT, and lowest in TAS, VIC, NSW and QLD. With recent data pointing to further softening in the monthly rate of dwelling appreciation, the average survey expectation for national house prices in the next 12 months was revised down, with expectations highest in the ACT, NT and WA and lowest in NSW and VIC. The outlook for rents however improved, and lifted in all states except QLD and TAS. Property professionals again singled out construction costs as the biggest constraint on new housing development in the country in Q4 (and more disruptive than in Q3). Lack of stock and price levels were identified as the biggest impediments for buyers of established housing, with credit access and rising interest rates also becoming more problematic for homebuyers, particularly in NSW and VIC.
With our view on rate hikes coming forward, we now expect the turning point in property prices to occur in the second half of 2022. That sees a flatter outcome in 2022 and a slightly larger fall in 2023. Overall, we see dwelling prices rising around 3% in 2022 before a decline of around 10% in 2023. We see this as a relatively orderly decline, and it is important to remember this correction comes after a very sharp run up in prices over the last year. More broadly we expect the economy to continue seeing healthy outcomes. With above trend growth this year, we see unemployment drifting lower, boosting wage growth and driving more sustainable inflation. This would see the RBA begin normalising rates from November 2022 with a steady series of hikes to come through 2023 and 2024.
Get all the insights in the NAB Residential Property Survey (Q4 2021)
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