The best and worst of the 2022 Australian property market

It has been a turbulent year for the Australian property market in 2022 and a new study from CoreLogic has revealed the main trends in real estate over the last 12 months.

Successive interest rate rises, surging inflation, low consumer sentiment and deteriorating affordability has driven a shift in Australia’s 2022 housing market performance, according to CoreLogic’s annual Best of the Best report.

The report summarises the country’s annual property performance, highlights the strongest and weakest areas and provides an outlook for the year ahead. It also breaks down the diversity in market conditions across geographies, value segments and property types.

CoreLogic head of research Eliza Owen (pictured above left) said summing up the year that was, she noticed two distinct capital growth trend characteristics in 2022.

“The first is not all housing markets were uniformly impacted by market headwinds as more expensive markets tended to see sharper declines, while the more affordable segment of the market where buyers typically do not have to extend themselves as much to buy into, saw greater resilience to increases in interest rates,” Owen said.

“The second trend is the pace of decline has been slowing on a broad basis since September. While this may be seen as a positive by some, there is still risk of the decline re-accelerating in the year ahead.”

CoreLogic economist Kaytlin Ezzy (pictured above right) said there was a prominent theme in the Australian property market over the last 12 months.

“Last year’s Best of the Best celebrated some of the strongest annual sales turnover and value growth on record, however this year’s report examines some of the most resilient markets as we move through one of Australia’s fastest interest rate tightening cycles in history,” Ezzy said.

The Best of Best report showed that over the year to November, national housing values fell -3.2%, driven by an annual decline in capital city dwelling values of -5.2%, while regional dwelling values rose by 3.3% over the same period.

The estimated total value of residential real estate decreased from $9.6 trillion in December 2021 to $9.4 trillion in November 2022, while estimated annual sales declined -13.3% compared to the year to November 2021, with approximately 535,000 homes sold nationally. In a recent report, CoreLogic revealed that almost 170 suburbs had lost their million-dollar status.

Ezzy said across the capital cities, suburbs in Sydney’s city and inner south, northern beaches and eastern suburbs regions dominated 2022’s list for largest house and unit value declines.  

“Houses in Narrabeen, Surry Hills and Redfern recorded the most significant falls in value over the year, down more than -25%, while unit values in Centennial Park and Mona Vale fell by -23.1% and -20.8% respectively,” she said.

At the other end of the scale, Adelaide suburbs dominated the list for strongest annual appreciation in value across both property types, with house values across Davoren Park rising by 34.7% and unit values in Seacliff Park 41.4% above the levels recorded this time last year.

Ezzy said Adelaide’s resilience had been a consistent feature of the housing market in 2022 – while it was down -0.9% from the July peak, dwelling values across the city were still 13.4% above the level recorded this time last year.

Top and bottom regional performers

Ezzy said despite being more resilient to current market conditions, regional values had not been immune to the current downturn.

“Although a number of regional suburbs recorded exceptional annual growth, including house values in the New England NSW township of Bingara (36.2%) and unit values at Laguna Quays on Queensland’s coral coast (30.9%), the majority of regional South Australian markets have moved past their cyclical peak and are now recording declining values,” she said.

Suburbs across NSW’s Richmond-Tweed region, which were impacted by both rising interest rates and damaging flood events, dominated the list for largest regional hotspot annual house values declines, while decreasing unit values across QLD’s Townsville also featured heavily.

Popular lifestyle markets such as the Southern Highlands, Shoalhaven and the Illawarra as well as southeast Queensland’s Sunshine and Gold Coasts recorded some of the strongest peak-to-trough declines in value.

Crystal ball market outlook for 2023

Owen said although dwelling values had been slowing, which suggested the market might have moved past the peak of home value declines, further rate rises were anticipated in the early months of 2023, which could cause the rate of decline to pick up speed once more.

“As we move into 2023, there continues to be a mix of headwinds and tailwinds for housing market performance,” Owen said.

“With expectations that the bulk of the rate tightening cycle occurred in 2022, housing value declines could find a floor in the new year. However, the extent of the floor in values could be further weighed down by mortgage serviceability risks, particularly for those rolling out of record-low fixed mortgage rates through the second half of year.”

Best of the Best 2022: National house highlights

  • Most expensive suburb: Vaucluse (NSW) $7,943,965
  • Top sale price: 38A Wentworth Road, Vaucluse NSW $62,750,000
  • Most affordable suburb: Kambalda East (Western Australia) $118,525
  • Strongest 12-month growth in values: Bingara (NSW) 36.2%
  • Largest 12-month decline in values: Narrabeen (NSW) -26.8%
  • Strongest 12-month growth in rents: Clovelly (NSW) 25.1%
  • Highest gross rental yields: Kambalda East (Western Australia) 15.9%

Best of the Best 2022: National unit highlights

  • Most expensive suburb: Point Piper (NSW) $2,895,563
  • Total value of top 10 sales: $386.3 million
  • Most affordable suburb: Laguna Quays (Queensland) $72,076
  • Strongest 12-month growth in values: Seacliff Park (South Australia) 41.4%
  • Largest 12-month decline in values: Centennial Park (NSW) -23.1%
  • Strongest 12-month growth in rents: Melbourne (Victoria) 38.2%
  • Highest gross rental yields: Kalgoorlie (Western Australia) 11.8%

From AustralianBroker

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