5 property trends to watch out for in 2023
From April 2022 the Reserve Bank has continued to hike the cash rate each month to combat inflation, creating challenging times for home buyers and owners all over the country. Toss in creeping interest rates, an ongoing rental crisis, demand for properties higher than supply and a resulting affordability issue, many Aussie households are wondering what to expect next.
Today we look at five property market trends to keep your eyes peeled on for the next 12 months. If you’re in the market to buy or looking to buy soon, be a #smarthomebuyer and make sure you’re on top of the latest movements and shifts.
1. Property price drops will be shorter and less severe
As we kick off a new year in 2023, recent data from Domain’s report reminds buyers and sellers of the cyclical nature of the Australian property market and that property should be viewed as an investment for the long-term.
With interest rates skyrocketing month by month and property prices falling, it can certainly make homeowners feel uneasy about their property journey and what may come next.
Although experts suggest property prices will continue to fall gradually in 2023, it is unlikely it will undo all the growth seen during the pandemic bonanza.
2. Opportunities for upgraders up for grabs in a multi-speed property market
Over the next 12 months experts expect that a multi-speed market will become more evident, with housing prices in some locations falling faster while others will remain more resilient
Overall, data suggests that entry-priced houses and units will hold strong, especially in the most expensive capital cities, Sydney and Melbourne.
This will be ultimately be driven by the affordability and purchasing barriers, first-home incentives and the deteriorating borrowing capacity (due to rising interest rates) driving further demand to more affordable housing options on the market.
This, in conjunction with the more premium priced homes seeing greater falls in value, will create opportunities for upgraders looking to snap up their dream home.
3. Housing prices are affected by more than just interest rates
How fast and how much housing prices fall will depend on a number of factors, however, the amount prices fall will be primarily shaped by how high interest rates may reach, and in turn when and how quickly inflation is tackled.
Interest rates, however, are not the only factor influencing housing prices. factors such as tax settings, banking regulations, population growth, immigration return, income growth, and the responsiveness of new housing supply to growing demand all make a huge impact on how much you could pay for your home.
In April of last year, the initial rate hikes shell-shocked potential buyers at the time, but now many prospective buyers have adjusted to the new norm of rising interest rates and are more conscious of their lowered borrowing capacity.
Economist and property experts believe that the wave of expiry on fixed rate home loans this year will reveal the true impact of interest rate increases on consumer spending as more Australians tighten their purse strings to cover the increase in repayments over the last 8 months.
4. Housing demand to grow with return of international immigration
As Australia’s borders opened to immigration early last year, the country’s major capital cities have welcomed back many skilled immigrants and overseas students. All of whom are looking for housing to either rent or buy.
As part of the federal budget, the Australian government has increased its quota for the permanent Migration Program to address the skills shortage gap which may ultimately create the biggest immigration drive ever for Australia.
The influx of people arriving from overseas who are looking for homes will add pressure and huge demand to Australia’s current housing market.
At first, it is expected that this will place significant strain on the rental market, however the continuation of rising rents will also make purchasing more attractive for strategic investors looking to build wealth for long-term gain.
5. Buyers will pay up for the right location and neighbourhood
Over the last 12 months, Domain’s analysis of keyword searches and data revealed that lifestyle additions and location are set very high on wish lists, such as ‘pool’, ‘waterfront’, ‘beach’ and ‘view.’
Property experts and economists anticipate these desires will continue to be highly sought after as many buyers are still willing to pay a premium price for the right neighbourhood, lifestyle and their home’s liveability features.
The global pandemic and resulting work from home requirements has created one of the greatest lifestyle shifts Australians have experienced.
It emphasised the importance of the home itself, the surrounding community, as well as the ability to work, live and play within a short distance of where we live.
As we roll into a new year, we expect Australians to have their desire for more space, added security, the balance of lifestyle needs, the right amenities, education, sports facilities and green space on the top of their wish lists.
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** General Advice Warning
The information provided on this website is general in nature only and it does not take into account your personal needs or circumstances into consideration. Before acting on any advice, you should consider whether the information is appropriate to your needs and where appropriate, seek professional advice in relation to legal, financial, taxation, mortgage or other advice.