Trends that will shape the property market in 2023
As the end of the year approaches, it’s fair to say 2022 proved a wild ride for the property market.
After the record price increases of 2021, this past year has seen the market soften slightly and return to a more ‘normal’ landscape.
But what’s set to happen moving forward? Here, we look at five trends that will shape the property market in 2023…
Interest rates will have an impact
After maintaining a record low interest rate of 0.1 per cent throughout the pandemic, the Reserve Bank of Australia swiftly increased interest rates throughout 2022 to see the cash rate currently sitting at 3.1 per cent.
Those rate increases will have a further impact on the market in 2023 as fixed rate loans revert to variable and homeowners start feeling the effects on their hip pocket.
The RBA maintains most homeowners are well placed to absorb these hikes, but potentially it could see additional properties on the market if mortgage holders struggle with the affordability of their loan.
Meanwhile, all four of the Big Banks are tipping the end of rate increases is in sight, with the peak expected to occur by March before the RBA begins decreasing the cash rate again.
Affordability will be front of mind
One of the biggest impacts of this year’s cash rate increases has been reduced borrowing power for many buyers.
Higher rates mean buyers can borrow less than they were able to back in 2020 and 2021 and have revised their purchasing budgets.
This trend will continue in 2023, with buyers also mindful of how any further interest rate hikes would affect their financial position.
For sellers, that means they need to be realistic about the price their property will command. Properly priced properties will likely remain popular and continue to sell quickly.
Investors will return
With the rental vacancy rate at a record low and rents increasing in many areas of the country, 2023 will likely see investors return to the market.
They will do so in the knowledge property investing is a long-term strategy where property prices generally increase over time.
Mini markets will remain
As we’ve seen over the past couple of years, the Australian property market does not operate at a single speed.
Instead, there are markets within markets that are influenced by a range of factors including population shifts, affordability, lifestyle, convenience and more.
This trend will continue. While some markets might see downward pressure on prices due to rising interest rates, others will continue to achieve price gains.
How your property is impacted will depend on where you are, but it will also be important to remember any price declines are unlikely to reverse the gains of the 2020-21 property boom.
Livability will be important
Livability proved a major drawcard for buyers throughout the pandemic as Australians began to place more importance on how their home accommodated their personal lifestyle.
That’s set to continue. Space, functionality, and community will remain important to many buyers who will pay a premium for a property that meets their needs.
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