Predicting the Australian property market outlook in 2023 is just about as easy as finding the needle in a haystack.
While it’s mostly speculation with time travel not invented yet, the market as a whole can at least tick off that the once in a generation property boom is coming to its end.
By October 2022, all capital cities except for Darwin, recorded a housing downturn. Similarly, regional Australia too is heading into downturn, with only regional South Australia recording an increase in housing values in September.
Now, for 2023 property market, the extent of the market disruption and future prices will heavily depend on a few domestic influences, and some macro-international economic factors.
Firstly, the Reserve Bank of Australia (RBA) and its attempt to curve inflation by rising interest rates.
Secondly, the buyers and sellers’ markets. As we saw with the boom, a large sway of buyers into the market forced prices up, with selling looking more appealing.
Interest rates
At the time this was published in October 2022, interest rates had reached 2.60 per cent, with the RBA predicted to continue its trending hikes until it reaches three per cent.
With this in mind, ANZ announced it foresees a 20 per cent fall to housing prices across Australia’s capital cities until the end of 2023. It added a prediction for a “modest recovery” in 2024 if mortgage rates fall.
August 2022 Mortgage Breakdown
For the average borrower with a $500,000 loan and 25 years remaining, August’s increase will result in a $140 a month increase – or $472 since the RBA began lifting rates in May 2022.
A person with a $750,000 loan currently faces a monthly increase of $211 (up $708 a month since May) while those with a $1 million loan are facing a monthly increase of $281 (or an eye-watering $944 a month increase since May).[DH1]
Positively, despite the growth in interest rates, many predict it will not spell a property market crash in 2023. Rather, it is described as a market correction, and has been trending in major capital cities since the start or 2022.
To start 2023, and Australian capital cities would have just experienced a mix of yearly market growth and downturn, but overall, are predicted to remain within the buyer’s grasp.
Dr. Andrew Wilson, chief economist of My Housing Market predicted calendar year 2022 growth to be:
- Melbourne = down -6%
- Brisbane = up 11%
- Adelaide = up 12%
- Perth = up 9%
Buyers and sellers’ Australian property market
Throughout the history of the Australian property market it can be said that one thing will always remain: the overall willingness to become a homeowner.
Therefore, while difference influences will see the housing market rise and fall throughout each month of 2023, ultimately, Australian’s will continue to seek their dream home, or investment. These influences include:
- Consumer confidence – in 2022, buyers have become more cautious and many taking a wait-and-see approach, while sellers’ confidence is more fragile.
- Fear of rising inflation & cost of living – this will continue to sideline many potential buyers.
- Borrowing capacity – another wait-and-see, if interest rates continue, borrowing capacity will reduce.
- Uncertainty – many looking at the macro of Australian and world economic future will have buyer and seller confidence fall.
- Affordability issues will constrain many buyers: with property values being 20- 30% higher than three years ago, it will become infinitely harder for buyers, especially in a single wage household.
- FOMO (Fear of Missing Out) has disappeared – That property boom buzz to get your hands on real estate is being traded by a buyers market with caution and time to research further.
Ultimately, Australia’s 2023 property market will become a smarter one. With less urgency, and more time to research and find a perfect match for demand, it is likely we’ll see less total auction attendee figures but delivered at a high percentage of success.
