In 2022, we saw the Reserve Bank Of Australia lift the cash rate a whopping eight times, stretching many household budgets to their limit. Consequently, this significantly decreased buyer confidence, which was reflected in lower clearance rates and listings throughout the year. Having reached their highest level since 2012, countless Australians are wondering whether they will see a similar pattern in 2023.
Let’s take a closer look.
Despite Australia’s 3% interest rate increase in 2022, many experts such as the Head of Australian Economics at CommBank, Gareth Aird, believe we are nearing the end of a cycle. Aird says with the likelihood of inflation coming down in 2023, we will start to see ‘below-trend growth’. In a similar fashion, AMP Chief Economist, Shane Oliver, forecasts that prices will bottom out in the September quarter of this year, before starting to recover towards the end of the year as the RBA moves toward lowering rates.
While some additional rate hikes are expected in the first half of 2023, stronger sentiment is believed to return to the property market on the provisor the RBA’s cash rate does not surpass 4%. According to leading data analyst and research partner Louis Christopher, Founder of SQM, prices are expected to start recovering in the second half of this year. This can be attributed to several economic factors including but not limited to increased migration, a strong economy with low unemployment, good job growth and rewarding rental returns on top of the double digit growth achieved in 2022. In fact, former immigration official Abul Rizvi is forecasting that Australia will have net migration of more than 300,000 this year due to a surge in post-pandemic arrivals – great news for property investors!
As a result of this, SQM has predicted in their ‘Housing Boom and Bust Report 2023’ an average increase of 8-13% across Australia’s capital cities, with Melbourne, Sydney and Perth seeing the largest increases.
Having many positive trends forecasted for 2023, it’s fair to assume that any impacts derived from prospective interest rate rises can be largely mitigated by property investors. Combined with the huge 20% uplift achieved by AllianceCorp members last year, 2023 is looking bright!
For more information on how you can best manage interest rates and get ahead of the game, simply fill out the form below to request a no-obligation strategy session with one of our esteemed Senior Property Wealth Planners valued at $495 for FREE.