Despite the uncertainties over the year brought about by the successive rate hikes, surging inflation, low consumer sentiment, and deteriorating affordability, capital growth trends in 2022 showed two distinct trends.

CoreLogic head of research Eliza Owen said not all housing markets were uniformly affected by the market headwinds.

“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,” she said.

Another trend seen over the year is the easing of the pace of decline — still, while this may be seen as positive, there remains risk of reaccelerating in the coming year.

In fact, national value falls eased to 1.0% in November, following the steep monthly falls of 1.6% in August.

Ms Owen said while the decline was already past the peak, the likelihood of rate rises expected in the early months of 2023 could potentially see falls pick up speed once more.

“With expectations that the bulk of the rate tightening cycle occurred in 2022, housing value declines could find a floor in the new year,” she said.

“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.”

However, unemployment levels remain at historic lows, and this plays a role in serviceability. This also keep a lid on mortgage arrears.

“On top of that, strong rental markets and improving affordability from the point of falling values, may entice investors and first-home buyers into the market, underpinning a recovery in buyer activity in the second half of 2023, when the cash rate stabilises,” Ms Owen said.

Here are the markets that witnessed a remarkable change over the past year:

Housing markets:

  • Most expensive suburb: Vaucluse (NSW) $7,943,965
  • Most affordable suburb: Kambalda East (WA) $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 (WA) 15.9%

Unit Markets:

  • Most expensive suburb: Point Piper (NSW) $2,895,563
  • Most affordable suburb: Laguna Quays (QLD) $72,076
  • Strongest 12-month growth in values: Seacliff Park (SA) 41.4%
  • Largest 12-month decline in values: Centennial Park (NSW) -23.1%
  • Strongest 12-month growth in rents: Melbourne (VIC) 38.2%
  • Highest gross rental yields: Kalgoorlie (WA) 11.8%

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