Is The Property Market Predicted To Crash? Everything You Need To Know Looking Into 2023

Interest rates are rising, inflation is running rampant and media headlines are filled with doom and people are terrified of losing their hard earned money. But despite all of this, there are a number of factors concluding that the property will not crash, but likely initiate another boom period.

Not convinced? Let us explain why.


The Australian Property Market

There’s no doubt that the booming growth experienced in 2021 was truly a year like no other. The housing market skyrocketed 20% which amplified the collective wealth of homeowners by ten fold.

And while we’ve naturally progressed into the next phase of the property cycle, commonly known as the ‘correction’ cycle, it’s no surprise we aren’t seeing that level of growth in 2022.

For example, much of the media hype is focusing on the house price falls in Sydney and Melbourne at -2.8% and -2.0% respectively over the year ending the September quarter of 2022 (Source: My Housing Market), however Sydney remains the most expensive capital with a median house price of $1,440,777 – well ahead of second-placed Melbourne at $1,027,927.

Already showing signs of improving in these two major capital cities, the likes of Brisbane, Adelaide and Perth are also still demonstrating strong annual growth to the end of the September quarter at 16.8%, 14% and 7.6% respectively.

As we progress into 2023, there are also a number of other factors pointing to a boom that we are already experiencing – including but not limited to:

  • Record low vacancy rates of 0.9%, the lowest it’s been since 2006 (Source: SQM)
  • A shortage of listings of properties for sales
  • Developers deferring major projects due to supply chain issues, shortages and costings derived from the effects of COVID-19
  • International borders are open and migrants and international students have only just started to return, not reaching full capacity
  • Government stimulus packages to boost first-home-buyer activity in regional areas


With supply at an all time low and demand at an all time high, this has historically proven time and time again to drive house prices up, and looking towards 2023, the current shortage of properties is only set to worsen – posing a prime opportunity for investors to expand their portfolios and reap the benefits of rewarding rental returns.



Interest Rates & Mortgage Stress

Rising interest rates and mortgage stress has been at the forefront of all the media hype, with the RBA’s latest decision to increase again by a moderate 0.25bps, but the reality is this:

  1. The average Australian is wealthier than ever before – CBA reports that which does not include the significant equity they generated during 2021!
  2. 31% of Australians don’t have a mortgage at all and 30% are renting, so interest rate changes will have no direct impact on approx. 60% of Australians. (Source: MPA)
  3. Interest rates are still low! Between 1990 and 2022, Australian interest rates averaged 3.85 per cent (Source: Trading Economics), so the recent decisions implemented by the RBA must be rationalised with the record low interest rates we have enjoyed over recent years. While these are set to increase in the coming months, the RBA has already signalled that increases will moderate sooner than expected.
  4. Signs are emerging that inflation may peak sooner than expected, and also lower than predicted with the price of oil falling sharply and the cost of construction now starting to ease.
  5. Lender’s make provision for interest rate increases when granting a loan, which means most mortgage overs who borrowed over the last couple of years will be able to manage the interest rate increase of up to 3% and those who borrowed prior to this will likely have considerable equity in their property.
  6. Australia is reporting record low joblessness and rising wages – further supporting Australia’s housing market activity.



Markets Within Markets

Despite generalisations that the Australian property market is set to plummet 10-20% by 2023, there are many markets within markets that are earmarked for significant growth due to increased demand, location, proximity to CBDs, employment opportunities, amenities, education and most importantly, affordability.

We recently sat down with Hotspotting’s Terry Ryder who took a deep dive on some of the key locations to target in 2023, some of which he highlighted to be: regional areas along the east coast (QLD, NSW and VIC), regional areas in Western Australia and Adelaide as well as inner-city suburbs with boutique apartments which appeal to both the need for affordability and lifestyle.

In summary, Mr. Ryder concluded that it’s crucial not to generalise an entire market to ‘plummet’ as not all markets are the same, particularly within Australia where all states operate on different property cycles. Demonstrated by the locations outlined, he highlights that you can have a market where a state, such as Melbourne or Sydney may not be performing, but there are municipalities and suburbs within them that are – such as Hume, Melton, Wyndham Vale and more. You can find more information on those key markets here.



The Bottom Line

In summary, there is no need to panic or stress about the Australian housing market crashing or the value of your home or investment declining in the long term.

If your property devalues 5%, does it really matter if the value of your property appreciated 20-30% over the last 2 years?

The point is to remember that we are in a correction phase and it is crucial to your success to not get stuck into the media ‘doom and gloom’, make your own informed decisions and ensure you have sufficient buffers in place to prepare you for any unforeseen circumstances.

If you’re like many property investors, you’re likely wondering what the right move is at the current moment, and like we advise all of our clients, the best time to buy is when you can next afford to.

If you’d like to discuss your options further, simply fill out the form below and request a no-obligation 90-minute strategy session with one of our esteemed senior property wealth planners valued at $495 for FREE.


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