What To Expect In The Property Market For 2023
In This Weeks How's The Market | Edition 34
What To Expect From 2023
Agents Need Stock
A Grim Outlook On The Rental Crisis
What To Expect In The Property Market For 2023
Despite what the news outlets have been saying in the media, we have seen on the ground that the new year is bringing back a glimpse of buyer confidence. Whilst this is typical for this time of year as many people are getting back into the swing of things and have now been back at work for the last few weeks after contemplating their existence over the holidays, it does mean it’s shaping up to be a semi-normal year in real estate.
We have seen upwards of 50 groups attending open for inspections at excellent properties in great suburbs, showing that there is still demand for the right asset in the marketplace.
Over the last 9-months, sentiment and housing values have been falling for one main reason: interest rates. In February, we saw the RBA make another 0.25% interest rate rise bringing the total cash rate to 3.25%. However, this hasn’t seemed to affect sentiment as much as it did last year as it was largely expected and major economists and banks are predicting we are at or close to the top of the interest rate cycle.
For the most part, vendors are aware that they will no longer be able to achieve the prices that their properties may have fetched in 2021-2022 and only a few stubborn vendors have refused to drop their prices leaving their properties sit on the market for 6+ months.
Still, many buyers and sellers are also sitting on the sidelines and waiting for the month when the RBA doesn’t increase the cash rate. Many agents have predicted that buyers will jump into the market in droves when this happens as there will be a boost of confidence that we are at the top of this rate cycle and that only rate reductions will come.
Whilst I am not an economist, I don’t believe this will be for some time. One economist gave a great analogy that I have previously used in this How’s The Market series relating interest rates to your kitchen taps. Stating that increasing interest rates is like turning the hot tap on full. Once it’s on, it takes a while before the water starts heating up and then very quickly it becomes too hot and starts to burn, resulting in the cold tap needing to be turned on to create balance.
This compares to interest rates as once rates have been lifted, it will take many months before we see any effect. Then once we do start to see an effect, it is likely that it will start to overcorrect inflation and the interest rates will need to be dropped in order to escape recession.
What The Agents Are Saying
Agents are stating that the hardest part about operating in the current market is still getting stock. As long as properties are priced correctly in accordance with the current market they will still sell in a standard amount of time of roughly 30 days.
The problem for many agents is trying to get enough of the right stock that the buyers are wanting.
With many vendors sitting on the fence and simply holding back to see what happens, a lot of the properties on the market are from those that need to sell from their circumstances.
The Wow Factor!
Does your pool have an underwater window into your gym? Didn’t think so.
20 Heyington Place, Toorak - Price tag - $37m
In The Media
Rental crisis only going from bad to worse
I wish I could say that this article has a clickbait heading and is over exaggerating the rental crisis for views, unfortunately, however, this article does paint an accurate picture as to the state of where we are and where we might be heading.
“In Sydney residential vacancies have just hit a nine-year low, rents are again rising in Melbourne, Perth is at a 40-year low for rental property availability, and Queensland’s dire rental market has stirred up calls for the size and frequency or rent rises to be restricted by legislation.
While the rental crisis is widespread and its impact reverberates throughout society, it is the young to early middle age that are feeling it the most.”
A good article and worth the read.
Final Thoughts
Whilst the market is dropping and by no means have things started to turn around yet, there are glimmers of hope that 2023 could be the end of the decline and that property prices may stabilise or even begin to rise by the end of the year.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is my opinion, please seek your own expert advice when making decisions.
