Aggregate value of Australian properties sold almost doubles within four years

In a year of record interest rate rises, Australia recorded more than 730,000 property sale settlements nationally1 in 2022, with an aggregate value of $674.5 billion, demonstrating Australians’ passion for property remains strong, accordingly to PEXA’s latest Property Insights report published today.

While nationally, property sale settlements were down 11.8% in 2022 compared to the extraordinary levels seen in 2021, Australia’s property market has grown significantly from pre-pandemic levels (up 24% in volume of sale settlements since 2019), fuelled by record low interest rates, government stimulus, locked-down lifestyle changes and a stronger than expected economic rebound. As several factors have receded, a normalisation of the market has been witnessed throughout 2022.

While property prices will remain in sharp focus as we head into 2023, the national aggregate value of property sales in 2022 only dropped 2%, to $674.5 billion, which is considerably higher than the aggregate value of sales seen in 2020 ($437.8 billion) and 2019 ($390.9 billion).

In the residential housing market, Queensland continued to lead the nation for the greatest number of sale settlements, with 194,849 completed in 2022. The state’s southern neighbour recorded the largest decline in sale settlements for the year, with New South Wales witnessing an 18.1% decline on volume from 2021 (177,555 sale settlements), and a 9% decline in aggregate value ($207 billion). Victoria experienced the lowest annual decline across the three major eastern states, recording 185,096 sale settlements (down 10.6% year-on-year) with an aggregate value of $157.1 billion – which was up 0.6% from 2021. South Australia recorded 51,215 sale settlements in 2022 (almost 4,000 less than in 2021), however recorded the highest growth percentage of any state in aggregate value of settlements, up 12% to $33.8 billion. Western Australia’s property market demonstrated the greatest resilience during 2022, with the volume of sale settlements only dropping 3.6% year-on-year, however the aggregate value of property sold rose by 12% to $54.1 billion

Victoria led the east-coast states in commercial real estate settlements, with 12,522 commercial properties settled during 2022. Queensland and New South Wales battled it out for second place, with Queensland coming out on top with 10,638, followed by New South Wales with 10,398 commercial real estate settlements.

PEXA’s Head of Research, Mike Gill, said: “Over 730,000 property settlements were recorded nationally in 2022, indicating that property market activity levels remained relatively elevated, albeit down from the record highs of 2021. Although settlement volumes in 2022 were down 12% year-on-year, they were 16% higher than in 2020 and 24% higher than in the pre-pandemic 2019.

“In value terms, rising property settlement volumes together with sharply rising prices nationwide saw the aggregate value of all property settlements reach an all-time annual peak of $688bn in 2021, before falling by 2% to $674.5bn in 2022. Even after this dip however, the aggregate value of settlements in 2022 was still 54% higher than in 2020 and 72% higher than in 2019.”

As the restrictions of the pandemic faded in the rear-view mirror in 2022, geopolitical forces disrupted energy markets and global supply chains, stoking inflation and undermining confidence. These factors, together with multiple interest rate rises, have all impacted Australia’s property market.

PEXA’s Chief Economist, Julie Toth, added: “This year’s lower settlement numbers come as no surprise. In many respects, they indicate a reversion to more ‘normal’ market conditions following two extraordinary years for Australia’s property markets. Settlement volumes, along with pricing and other key market activity metrics, were driven to temporary highs during and immediately after the pandemic, led by the ‘Great Relocation’.

“This market activity was encouraged by record low interest rates and a range of government stimulus programs that boosted demand for more housing. Other unusual trends during this period included rising divorce and separation rates, a sharp rise in interstate migration and a further decrease in people per household, all of which contributed to stronger demand for housing, despite national population growth plunging towards zero.

“After this unique period of disruption, PEXA’s latest Property Insights report confirms that property market conditions are now normalising. Looking ahead, the Australian property market will continue to moderate through 2023, in response to the sharpest tightening of monetary policy in Australian history, as well as other cyclical factors.

“A number of variables exist for Australia’s economy and property markets in 2023. Net migration is returning to Australia for example, but its likely timing and exact composition is not yet clear. The impending mass return of international university students to Australian cities could provide a sudden and unexpected boost to rental housing demand. On the supply side, the climate-related escalation in weather events could further deplete housing stocks in some locations, delay essential repairs and add to the pipeline of new dwellings waiting to be built.”

PEXA’s full year review of property refinance and new loan activity is due for release next week.

1 For the purposes of the report, ‘national’ is defined as the five mainland states: NSW. VIC, QLD, WA and SA