News & Advice.
Maker Advisory's 2023 Property Market Forecast
After three years of unprecedented economic and social upheaval, many of us are looking forward to hoping for a return to something closer to normality in the New Year.
Indicators are telling us that 2023 has the potential to deliver a somewhat smoother 12 months as the property market continue to stabilise. As for right now though, one thing is certain: we have finally entered the best period for buying property in over 5 years. Anyone even mildly entertaining the thought of diving into the market should do themselves a favour and act now.
The Maker Advisory team’s outlook for 2023 is for a return to a balanced market, higher home values and – eventually – some relief on the interest rate front either by the tail end of the year or early in 2024, depending on inflation. In the meantime, it looks highly likely that homeowners will have to soldier through more rate rises over the coming months before the Reserve Bank pulls the handbrake.
Here some of the main trends that Maker Advisory forecasts buyers and sellers will encounter in 2023.
Interest Rate Volatility
This is bound to continue in the short term. Interest rates rose from a historical low of .1% per annum to .35 % per annum on May 3, 2022. Since then, there have been seven rises in as many months, and as of December 6, the cash rate was sitting at 3.1 % per annum.
Despite headlines highlighting the pain these rises are causing, our experience is that a majority of homeowners were prepared for the cash rate to eventually lift above this year’s historical lows and the subsequent hike in home loan repayments. That’s why the Maker Advisory team believes that those homeowners who have held on since the first rate rise in May will continue to accept the inevitability of future rises and take them in their stride. This looks to be on the cards, the most recent rate movement predictions by the big four banks for the New Year putting variable rates for the average owner-occupier at about 6.61% in the first half of 2023.
“Our outlook is for another two or three rate rises over 2023 which will be followed by an easing of monetary policy by the Reserve Bank,” says head of advisory for Maker Advisory Reece Coleman. “Other economic factors will also come into play in coming months that will start numbing the effects of rate rises.”
Prices will increase
Expect to see property values inching their way back up but not until the second half of the year. Maker Advisory tips that home prices will likely start increasing around August prior to the spring selling season.
This is a key reason Maker Advisory buyer’s agents are advising clients looking at buying property to do so sooner rather than later.
“I’m constantly being asked about when I think the market has bottomed and when will be the time to buy,” Mr Coleman says. “It’s right now. Now is the time to buy.”
Property market to shift
“Over the next year we will see the current buyer’s market shift to a more balanced market,” Mr Coleman says. “I believe that by the middle of the year buyers will have lost the power they believe they now have.”
This balanced market could easily continue for three to four years.
The return of international migration will be a primary driver of population growth which in turn will positively impact property values in the coming year. Maker Advisory buyer’s agents are advising ex-patriate workers in particular to seriously start thinking about investing in the future by securing either a place to live, an investment property or both, as soon as possible.
“The increase in investment yields means that property investors too are probably better off buying now than at any time in the last five years,” Mr Coleman says.
Renovations reigned in
We may love watching reality television shows about other people’s home renovations but when it comes to our own, we will continue to have our hands mostly tied. In 2023, any homeowner wishing to embark on the kind of revamp that requires raw materials and skilled labour will still face the same issues that have plagued such endeavours for over a year: a shortage of trades people, supply chain problems, higher prices of goods and materials and delays in simply getting anything done.
As for right now, Maker Advisory is urging potential purchasers everywhere to act now – as current buying conditions will not remain this attractive for long. “Our resounding message to anyone even remotely thinking of purchasing a new home or investment property is that now is the time to buy,” Mr Coleman says. “Conditions haven’t been this favourable since well before the pandemic.”
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