Property market takeaways for mid-2023
With 11 rate rises in the space of 13 months, property and home ownership has been hitting the headlines a lot in 2023.
But what’s really happening in the market? Is now a good time to sell? Is it an opportunity to buy, or, with the rental vacancy rate at an all-time low and rents sky-rocketing, is now the time to invest?
On any given day Australia’s property market elicits a lot of media commentary, so let’s drill down to what’s really happening on the ground and take a good, hard look at four property market takeaways for mid-2023.
There will always be buyers and sellers
Regardless of what the media says or where interest rates sit, there will always be real estate buyers and sellers.
It’s simply a fact of life that people need to transact property at various stages of their life. They need to purchase their first home, downsize, upsize, relocate elsewhere, or simply cash in on the capital that their property has accumulated.
That said, the balance between buyers and sellers alters depending on market conditions, which has a flow-on effect to how long a property takes to sell and the price it commands.
So where are we at now? Well, this year has seen listing volumes decline compared to previous years. This decline in properties available is keeping the value of homes relatively high, but slightly lower than the heady days of the pandemic.
Meanwhile, properties are taking slightly longer to sell than they did in 2022 or 2021.
There are markets and micro-markets
The above is a snapshot of the national market in general, but in reality Australia does not have a one-speed property market.
Instead, it tends to revolve around micro-markets, which can vary from suburb to suburb, and state to state.
That’s why you might see headlines about a capital city’s property prices declining, but still one, a couple of suburbs or a number of areas continue rising in value.
In other words, it depends where the property is, how much demand there is for a home in that area, and whether people believe it still represents good value.
The impact of rate rises
A lot of commentary has been devoted to the rate rises of the past 12 months and the stress that might create for mortgage holders.
At present, that’s not translating to an influx of listings on the market. Where it is having an impact is how much buyers can borrow to purchase a property.
For every rate rise, a prospective buyer can borrow less from their bank, which means in some situations sellers might have to revise their expectations on what their ideal buyer is going to be able to pay.
The vacancy rate remains low
As much as interest rates have dominated the headlines, the rental vacancy rate has also been a hot topic.
This rate typically indicates the total percentage of properties in the rental pool which are currently available and, in a balanced market, the rental vacancy rate sits at 2-3 per cent.
However, the Australian rental vacancy rate currently remains at a low of 0.8 per cent, according to Domain.
This means there is competition for every rental property available, which has a flow-on effect of seeing rental prices increase.
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