If you’re keeping an eye on the Australian real estate market, then you know that the property market forecast for 2023 are vibrant and varied.
Despite a saturated housing market at present, there is no shortage of speculation from industry professionals on what to expect in the coming years. While some point to further drops in prices, others predict great expansion and yield potentials across the board.
So what’s really next for Australia’s real estate boom? Let’s talk about the emerging trends and how they can play out.
1. Cash rate hikes
The Reserve Bank of Australia has declared during their December 6 meeting that they will be pausing their sharp increase in official interes rates. However, it’s worth noting that they also made a statement about interest rates staying at record lows until 2024, and we all know that proved to be overwhelmingly incorrect.
So what is the concensus among experts? The four major banks all agree that there is likely going to be another hike in March 2023, followed by one of the below scenarios:
- A pause in rate adjustment, which means a sustained cash rate;
- A very slow upward movement; or
- A cut in cash rate: we might finally see the RBA cash rate go down to a beginning of “2” before 2023 ends.
Many economists are also predicting that more cash rate hikes could come in 2023 if the economy continues to recover and unemployment rates remain low. More cash rate hikes could cause a further decline of home values next year.
2. Increasing rental prices leading to more housing
With australian property prices going up at a relentless pace this year and the last, the rental prices in Australia have also increased. The country’s median weekly rent has gone up to $520 for houses and $460 for units in October.
This is all due to a combination of factors, including high demand for rental properties and rising living costs. The pandemic has caused a surge in people searching for rental properties, thus creating competition for available rental properties. All of this has driven up the cost of rent. Vacancy rates have also dropped to its record low: 11% in September.
This rental crisis due to rising house prices might carry over to next year. Plans are already underway to put up more housing and infrastructure as a solution to this predicament, especially since plans of boosting the population and immigration are also in the works.
More financial incentives are also anticipated to encourage tenants to break into the Australian real estate market and become homeowners themselves.
3. Moderate raise in Australian house prices
Are housing prices going to drop? Not quite: real estate forecast implies that there is going to be a moderate increase in housing market value in 2023.
There are a few factors that affect the Australian house prices: the RBA cash rate, inflation, and unemployment. Further cash rate hikes are already expected (albeit less aggressive). Inflation is likely not likely to abate this year – projected to hit 8% in 2023 from this year’s 7.3%.
At the same time, unemployment rates at Australia have remained significantly low, fortunately – currently at 3.5% at the time of this writing.
What all these imply is that the conditions for rising house prices are all present. And since it is forecasted that there will be more employed people in Australia (up by 0.74%) in 2023, this means that the general population will still have the wherewithal to get their foot up the property ladder. This means that there will be a continued demand for properties for sale.
Mapping out your 2023 financial goals? We can help!
If you’re thinking of entering the Australian real estate market or are already an invested player, then 2023 is shaping up to be an interesting year. There is a lot of speculation about wha’s in store, but it seems that there is potential for growth and expansion across the board.
So whatever your financial goals may be, we can help you map out a plan to achieve them. Contact us today to get started!
