Forrestfield 
The Australian real estate market has experienced some roller coaster ups and downs over the last few years.
In the last twelve months, prices in many cities dropped, but this followed meteoric rises during 2020 and 2021. At the same time, interest rates increased significantly as the Reserve Bank attempted to counter inflation.
According to CoreLogic, a -5.3% drop in housing values through 2022 marked the first time since 2018 that national home values fell over the calendar year. The 12 months to December also marked the largest calendar-year decline since 2008.
So what is ahead for 2023?
While it’s impossible to say exactly, here are some of the forecasts from economists and experts:
Shifting prices
When it comes to property values, opinions are divided.
According to the Property Tribune, in big-picture terms, home values are predicted to remain sluggish and even drop in many cities, at least during the first half of 2023. It’s forecast that Sydney, Melbourne and Brisbane in particular will be hardest hit, while Perth may see some slight growth.
However, this counters a report from a week earlier by realestate.com.au, which predicted prices in Sydney will increase in 2023. Apparently, an increase in demand for housing will see the Sydney market grow by 5 – 9%.
Over at Propertyupdate.com.au, confidence is high that predictions of a major fall in the Australian housing market are over-exaggerated. Well-known expert Michael Yardney suggests in his recent article that prices will fall, just not by a significant degree.
Interest rates
One of the most significant factors influencing house prices through 2023 will be the state of interest rates.
At the end of last year, ratecity.com.au reported on the predictions of the big four banks when it comes to interest rates in 2023:
- Commonwealth Bank: 3.35% by December 2022, then dropping to 2.85% by December 2023
- Westpac: 3.85% by May 2023, then dropping to 2.85% by November 2024
- NAB: 3.60% by March 2023, remaining steady into 2024
- ANZ: 3.85% by May 2023, then dropping to 3.50% by November 2024
The Reserve Bank has stated that changing interest rates will depend on whether or not inflation comes under control, which is why it’s hard to know what will happen.
What does it all mean?
There are some ‘doom and gloom’ predictions but after reviewing the opinions of multiple experts, it seems like the average forecast is for a mostly steady market during 2023, with a chance of price rises later in the year.
Final results will depend on buyer confidence and the performance of the local and international economy. If interest rate rises put too many homeowners under pressure, urgent sales may keep average prices from rising. However, rising numbers of migrants and expats returning home are likely to keep demand for dwellings strong, which will in turn help prices to hold strong, especially in popular cities.
Should you buy or sell in 2023?
While general forecasts are always interesting, it’s more important to focus on the areas where you want to buy or sell.
Get to know the local agents in your area so you can find out exactly what’s going on in terms of prices and make a decision that reflects your own goals and budget.
