Nobody knows what the future holds, but that doesn’t stop us from trying to predict it. For starters, we think Aussies will start feeling the real pinch next year when the buffer is exhausted after Christmas, school fees, and credit card repayments. The start of 2023 may be a telling blow in terms of where the rates might end up.
Where is the real estate market headed? In the spirit of futurism, let’s take a look at five real estate market trends that we are most likely to see in 2023. Keep in mind that this is by no means an exhaustive list – just a few possible scenarios.
1. Australian house prices to go down
As always, it is difficult to give a house prices forecast, and there is no single real estate market report from which we can make precise predictions — but hopefully things will get a little more stable next year.
“Will the real estate market crash?”
No, we – and most experts – don’t think so. The latest Proptrack findings indicate the decline of Australia house prices next year, both in regional areas and capital cities. The Reserve Bank of Australia (RBA) also released internal documents in which they opined the decline of the national average house price by 20% from 2023 through to 2024.
Brisbane property market real estate, which was very strong during the pandemic and the start of 2022, has also seen its average house price go down this year by 0.8%, and likely another 9.4% in 2023.
What does this mean for the Australian property market?
The borrowing capacity for most people has gone down this year because of the successive interest rates rise and inflation. However, with most real estate market reports speculating housing prices to go down and the inflation rates to cool, lending restrictions are going to ease a little — leaving borrowers more empowered to enter the property market.
2. Cash rate turnaround
Low mortgage rates have certainly not been a thing in 2022, with a lot of homeowners currently under mortgage stress. As of December, the RBA cash rate sits at 3.1% — a far cry from April’s cash rate which was only at 0.1%.
However, the quick and successive rate hikes could lead to a rate cut by 2023. Philip Lowe, RBA’s governor, said that the interest rates will keep increasing, but not on a pre-set path. Major banks predict that there is going to be another 50 basis points hike in March 2023, followed by either:
- A pause in rate adjustment, which means a sustained cash rate;
- A very slow upward movement; or
- A cut in cash rate, which means cash rate might go down to a beginning of “2” before 2023 ends.
The next RBA interest rate announcement is going to be in February. Until then, let’s keep our fingers crossed.
3. More home buyers and investors
There are likely more buyers entering the Australian housing market in 2023. This is evidenced by the latest CoreLogic data revealing combined capital cities having 2506 homes taken to auction in early December, which translates to a slowly (but surely) increasing demand for housing credit.
Residential property listings have gone up across the country, and the RBA cash rate hikes have not been as aggressive as they have been months prior: only up by 25 basis points recently.
Our NBHL team has also noticed a spike in local consumer confidence as we get more inquiries on properties from both home buyers and investors. From this we expect to see more investors gravitating back towards investment property as well.
To add, the government seeks to bring more immigrants (back to its annual cap of 190,000). With mass migration in the works, (e.g., foreign students and skilled workers, interstate migration), investors in anticipation of their arrival will be on the pulse for the most profitable property listings.
4. Apartments over houses
A major real estate market trend we see happening next year is the consumer shift towards apartments. As more and more people return to office for work, and rising interest rates still serving as a headwind for prospect borrowers, Australians will keep entering the real estate market — but with caution.
Lenders are also cautious on lending as they need to ensure borrowers can keep servicing their mortgage repayments. Housing affordability continues to bite the general population, and so the shifting sentiment among prospect buyers is inevitable. Apartments tend to be closer to CBDs, and people love walking to local cafes, shops, and other common establishments.
On top of all this, and the more obvious part, is that apartments are more affordable than houses. In November this year, the median price in Brisbane stood at $817,684 for houses and $494,785 for units.
5. Boom in Brisbane real estate market
Here’s what we foresee for Brisbane property market:
Experts say Brisbane will be a very strong real estate market in 2023. Having resisted the downtown pressures of this year, Brisbane will continue to benefit from the pursuit of affordability and be home to the best-performing property markets.
Brisbane housing prices are also expected to remain relatively affordable compared to other capital cities like Sydney and Melbourne.
And since we expect to see more people moving into Queensland as well as a bigger push for infrastructure and job creations approaching 2032 Olympics, our outlook for Brisbane property market remains optimistic.
Planning to buy or invest? At North Brisbane Home Loans, we’ve got you
We hope that you keep these market trends real estate in mind if you’re thinking of buying or investing in property over the next few years.
And remember, at NBHL we always have your best interests at heart. If you have any questions about how to take advantage of these trends or want advice on shopping for Brisbane home loans to get your dream home, don’t hesitate to get in touch. We look forward to helping you reach your real estate goals!
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
