Just a few weeks away from the new year, and what a year it has been for property!

The property market saw highs and lows with property prices at a record early in the year then quickly turning to the fastest quarterly decline. Commentaries say that Australia’s property market in 2022 will be defined as the year that transitioned into a downturn from a once-in-a-generation property boom.

Property highlights 2022

Following the extraordinary price growth in 2021, the market saw a sharp difference with house prices across the country, switching to the fastest quarterly decline on record.

Since the shift occurred this gave the buyers better negotiation power as supply rose and prices softened. However, affordability became an issue due to several rate hikes and increasing inflation, resulting in weaker consumer confidence.

The rental market became extraordinarily tight with tourism and migration coming back placing a great deal of pressure on supply & demand.

Market trends to watch for 2023

• Downturns will be shorter and less severe

As we head into 2023, with interest rates rising and property prices falling, in can understandably bring uncertainty to homeowners.

However, while property prices will continue to soften in 2023, it is unlikely all the growth throughout the pandemic boom will be erased.

• Opportunities for upgraders

It is expected that a multi-speed market will become more evident in 2023 with some areas falling faster, and others being more resilient.

Overall, entry-priced houses & units will hold much firmer. This will be driven by the barriers of purchaser’s affordability, first-home buyer incentives and deteriorating borrowing capacity steering demand to more affordable options.

Coupling this with houses at premium price point seeing greater falls will result in opportunities for people to upgrade.

• Immigration return

The return of international immigration will increase housing demand, initially this will place a further strain on the rental market but continued rising rental prices will also make purchasing more attractive.

• Interest rates

Interest rates are not the only factor affecting house prices, although largely shaped by how high-interest rates go, and when and how quickly inflation eases. Other factors that come into play are things such as tax settings, banking regulation, population, income growth and the responsiveness of new housing supply to growing demand all make an impact.

• The right neighbourhood

Buyers are willing to pay premium price to be in the right neighbourhood and their homes liveability features. Since the pandemic, homeowners and buyers have had the realisation of the importance of the home and its surrounding community, as well as the ability to live, work and play within a short distance of the home.

Heading into the new year it is expected that buyers will have the desire for more space, added security, the balance of life, the right amenities, education, sporting facilities and so on….