REGIONAL Victoria has bucked a national trend with negative annual growth in housing values in 2023.
Following years of high growth, regional Victoria was one of few regions to suffer a fall in property prices after peaking well before many areas of the country.
According to market researcher PropTrack, regional Victoria’s dwelling prices fell by 1.8 per cent in 2023, marginally offset by 0.03 per cent growth for all dwellings in December.
PropTrack said regional Victoria property values peaked in April 2022, well ahead of regional areas overall, which saw property prices hit new highs in late 2023.
Regional prices rose by 3.2 per cent over the year.
PropTrack economist Anne Flaherty said several factors contributed to the slowdown in price rises over the last quarter of 2023.
“There was an additional interest rate rise as well as an increase in the supply of homes listed for sale, which provided buyers more choice and helped to alleviate competition,” she said.
“Despite regional areas experiencing higher growth in December, combined capital city areas were the clear outperformers in 2023, with prices up 6.44 per cent over the course of the year versus 3.2 per cent in the rest of state markets.
“Even though recent months have seen a rise in the number of properties listed for sale, overall supply remains relatively constrained … this has been a key contributor to price rises in these markets.
“Despite the cool down in capital city prices seen over December, prices in 2024 will be supported by population growth and what looks likely to be a more
stable interest-rate environment.”
CoreLogic recorded a 1.6 per cent fall in property values across regional Victoria throughout 2023.
Research director Tim Lawless said that despite the annual 8.1 per cent increase, the year was punctuated by diversity.
“Capital cities have generally recorded stronger growth conditions relative to regional areas,” he said.
“Across the combined capital-cities index, dwelling values were up 9.3 per cent in 2023, more than double the 4.4 per cent rise recorded across the combined regional index.
“Stronger conditions across capital city markets is a reversal of the early COVID trend, which saw regional markets experience higher demand amid strong internal migration.
“Regional migration trends have mostly normalised through 2023, and the significant capital gains recorded through 2020 to 2022 has meant many regional markets have become less affordable,” Mr Lawless said.
Cities outperformed the regions last year as regional migration trends normalised after the pandemic drove demand for homes outside the major urban centres.
Prices should bottom out by mid-year and start recovering by later in 2024, he predicted, as the Reserve Bank would likely start cutting rates.
