Australian property market in 2023

The Australian property market has seen significant fluctuations over the past three years but experts predict that the instability may soon come to an end. In 2023, a leading market analyst believes that prices will begin to rise again with potential growth of up to 9% across the country. The market is expected to be driven by factors such as low interest rates, tight rental markets, increasing rental prices, rebound in foreign migration, growing wages, and ultimately, a shortage of housing supply, which may attract more investors to the market.

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Experts weigh in on what's driving the property market in 2023?

In 2021, low interest rates and increased household savings led to a significant increase in property prices.
In 2022, a sudden increase in interest rates caused a decline in consumer confidence and decrease in property prices.
Interest rates are expected to continue playing a role in the property market in 2023, but most rate hikes are likely over and there may be potential for rate cuts before 2024.
Factors expected to support property prices in 2023 include strong demand from tight rental markets, increasing rental prices, a rebound in foreign migration, growing wages, and a shortage of housing supply.
The worsening rental crisis driven by an increase in immigration may attract more investors to the market.
Investor activity may increase, likely underpinning the apartment market, with value units offering relative to other property types.
Tight rental market conditions may encourage others into home ownership, and strong rent growth has the potential to buffer price falls.

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When and where will interest rates reach their highest point?

The housing market is currently wondering about the future of interest rates. The big four banks have different predictions for the cash rate, with CBA forecasting one further 0.25% hike to reach a peak rate of 3.35% in February, NAB expecting it to level off in March at 3.60%, Westpac and ANZ thinking it will reach 3.85% in May. However, none of the chief economists are forecasting the cash rate to move beyond 4%. CoreLogic’s latest report notes that as interest rates peak and inflation eases, housing values are likely to stabilize. It also suggests that rate cuts or other forms of stimulus may be needed before a genuine market recovery can occur.

BANK	PEAK CASH RATE	MONTH OF PEAK
CBA	3.35%	February 2023
NAB	3.60%	March 2023
Westpac	3.85%	May 2023
ANZ	3.85%	May 2023

SOURCE: RATECITY

When will the market turnaround?

The big banks are forecasting further price declines in the double digits for 2023, but SQM Research’s managing director Louis Christopher has a different outlook. He has presented four possible scenarios that mostly predict growth returning to the Australian property market. These scenarios are primarily based on what happens with inflation and interest rates, with unemployment figures factoring in as well. In Christopher’s ‘base case’, which is dependent on the cash rate peaking no higher than 4%, capital city homes would rise between +3 and +7% in value by the end of 2023, with Sydney and Perth leading the way. Christopher believes that the markets can recover, and Sydney is expected to lead the recovery driven by the surge in underlying demand for residential property and its diverse economy.

SOURCE: OPENAGENT

When should you sell your property?

Listing a property is a big decision that requires careful consideration of the advantages and disadvantages. Even if the market feels uncertain, it’s important to remember that there will always be properties being listed and buyers looking to purchase a home. Conditions vary from suburb to suburb, so it’s important to understand your local market and get a ball-park estimate of what your home might be worth by using a free online estimation tool. Speaking to a top local agent is the best way to get a thorough understanding of the local market, what kinds of results are still being achieved, and what the best strategy could be to sell your property. A top agent will be able to provide a no-obligation appraisal of your property and help guide you through the process.

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Disclaimers Data provided in this article is of a general nature and should not be construed as specific advice or relied upon in lieu of appropriate professional advice.