Despite the country’s housing sector cooling in 2022, a new report showed one state bucked the trend by recording the highest number of residential sales settlements over the year.
Based on data from PEXA, Queensland reported 194,849 completed sale settlements over the 12-month period to December — the highest volume of residential sales settlements among other states and territories.
Although the Sunshine State defended its title as the most active housing market in terms of settlements for the second year, the recent figures are still down by 12.6 per cent from the 223,035 sales transactions completed in the region in 2021.
Whilst states experienced declines in 2022, NSW saw the largest annual decline in settlement volumes, down by 18.1 per cent. Data showed only 178,000 property settlements took place in the state in 2022, well down on the 217, 000 settlements the prior year.
Victoria experienced a 10.6 per cent year-on-year decline, with residential sales settlement in the state declining from 206,984 to 185,096, while South Australia saw an 8.5 per cent annual drop from 55,961 to 51,215.
Western Australia proved to be the most resilient market in 2022 recording the smallest decline of 3.6 per cent from 94,416 to 91,051.
In the commercial sector, Queensland was the only state to experience an increase in commercial sale settlements in 2022, rising by 8.6 per cent to 10,628.
Victoria also earned a small win during the period, emerging as the state with the highest volume of commercial sale settlements at 12,522. Despite trumping over other states, the figures are down 6.1 per cent year-on-year.
Meanwhile, NSW saw the highest value of investment in commercial property in 2022. $35.6 billion was spent in the state, ahead of Victoria’s $31.3 billion.
Overall, Australia recorded more than 730,000 property sale settlements last year, with an aggregate value of $674.5 billion.
While settlements were down 11.8 per cent compared to the levels seen in the previous year, the property market seemed to have grown significantly relative to pre-pandemic levels — up 24 per cent in sales settlement volume since 2019.
According to Mike Gill, head of research at PEXA, property settlements reverted to a more normal setting in 2022 after the record volumes of 2021.
Looking at a four-year period, the aggregate value of sale settlements almost doubled, significantly up from $390.9 billion recorded in 2019.
PEXA noted that as the restrictions of the pandemic faded in the rearview 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,” the report stated.
Echoing Mr Gill’s observations, PEXA chief economist Julie Toth said the annual decline in sales settlement “did not come as a surprise” and indicated a reversion to more “normal” market conditions following the boom over the last two years.
“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’,” she said.
She explained the market activity was encouraged by record-low interest rates and a range of government stimulus programs that boosted demand for more housing.
The expert also highlighted other unusual trends during this period, including 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.
Looking ahead, Ms Toth said 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.
Ms Toth said there are several factors that might influence how the economy and the housing market perform over the year.
“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,” she concluded.