It’s been one heck of a year in the Australian real estate market. How has it shaped up? Well, let’s take an eager look back at 2022 and review both ups and downs to see what trends are emerging.
You’ll also get an exclusive sneak peek into 2023 – because who doesn’t love trekking around property market predictions? With new restrictions, prices soaring or plummeting, the future is looking interesting – it can be hard to keep track of where we’re going.
Buckle up; this could be quite a ride.
The highs and lows of Australian property prices
Australian house prices rising and falling has been this year’s main theme. The Reserve Bank of Australia has increased the cash rate eight times this year. As of December 2022, it sits at 3.1% — a massive spike from April’s 0.1%. The RBA said that these rate hikes are a continuous effort at curbing inflation.
This has resulted in rising house prices and the decrease of annual real estate sales: down to $9.4 trillion in November 2022 from $9.6 trillion in December 2021. Some major capital cities like Sydney and Melbourne have seen their property markets recede in value. This is wildly attributed to the successive interest rate rises and low consumer sentiment in these areas.
On the other hand, regional areas like Brisbane and the Gold Coast remained relatively stable, if not perming better. According to the Gold Coast Bulletin, the interstate migration and a spike in locals buying into the market have caused the Gold Coast housing prices to skyrocket this year.
The Gold Coast property market was even ranked at the top by the international property consultants Knight Frank’s Prime Global Cities Index Q1 2022.
When will housing prices drop?
Currently, the Australian housing market is in a downturn, with the average house price Australia 2022 at $940,000 — evidently lower than that of 2021 which surpassed the million-dollar mark. We can expect to see, however, Coffs Coast continuing to perform relatively well. It experienced a 26.62% growth in median house price and 9.1% growth in median unit price since December 2021.
As of the December news for house prices, Gold Coast — which has enjoyed a tremendous boom in terms of property values during the pandemic lockdown — is heading towards a decline in values. As of Q3 2022, Gold Coast’s national median for properties fell 1.4%: 4.8% lower than its peak growth level. It is entering its cooling phase, and experts predict that this downward trend will continue in 2023.
Rental crisis
Australia’s rental prices have soared to new heights. This has resulted in the displacement of a growing number of renters, seriously worrying a few more others. To date, there is a shortage of 173,000 affordable dwellings, and 71% of renters say they pay an excruciatingly expensive rent.
On the Coffs Coast area and across the country, there is a clear trend on the oversupply of large houses PLUS a massive undersupply of smaller one to two bedroom houses leaving people no option but to:
- rent houses too large for their situation;
- pay way more rent than they can afford; or
- not be able to find housing at all.
To help solve this issue, we can focus on the conversion of larger homes into homes that can house two or three families. Under this concept families can share facilities and pay cheaper rent.
Over time this strategy will likely help reduce not just the demand for larger homes but the rent ($$) of larger homes as well. This, in turn, will make a great start to helping families in need and the current rental crisis.
If this is something that you’re interested in, feel free to get in touch with us! We can help you with strategies to get on board and help the cause!
Sneak peek for 2023 Australian real estate: Property market forecast
Making house market predictions is always tricky. However, based on the trends we have seen this year, it is safe to expect a mix of headwinds and tailwinds for the Australian real estate market:
- Further cash rate rises in the early months of 2023, which can cause the decline of home values to pick up speed again
- Increasing rental prices might encourage tenants to become first home buyers
- Immigration inflows and international students coming over in the next 12-18 months means there could be an upshot in international tourism. This also means an increase in demand for housing and rent
- More increases in interest rates, and even higher inflation
- More and more homeowners might look into refinancing their home loans, especially those with fixed-rate mortgages that are ending their terms
Why house prices can't keep going up
Looking forward, the outlook for 2023 depends on numerous factors that range from: macroeconomic trends such as GDP growth rates;
- global events such as the ongoing wars and trade disputes between countries;
- governmental roles like taxes and regulations;
- consumer sentiment around buying a home;
- lenders offering competitive interest rates; and
- private investors entering the market with large amounts of capital:
All these factors will impact how house price trends develop in Australia over the next few years.
It’s challenging to predict exactly what the housing market Australia would look like with absolute certainty. However, there are certainly powerful forces pushing them both up and down that should be taken into consideration when making decisions about buying or selling real estate in this country during 2023.
Keen on reaching your financial goals for 2023? Let Q Financial help
That’s it for our mortgage broker blog on the 2022 Australian real estate market trends. We’ve seen prices rise and fall, new restrictions being put in place, and an overall level of uncertainty regarding the future. But despite all of that, there are still plenty of opportunities out there for those who know where to look.
If you need help reaching your financial goals, our team at Q Financial is here to assist you. We provide solutions on finance for doctors, medical professionals, teachers, and more! Contact us today to learn more about how we can help you achieve success in the Australian real estate market.
