2022: a year in review and my predictions for 2023!
As a buyers agent, I can tell you that the property market has sure been in a whirl these last 2 years! There was so much going on, from national property prices increasing by 22.8% year-on-year, to falling by 1.9% over the first 11 months of 2021, and interest rates shifting from 0.1% throughout the pandemic to a whopping 3.1% as inflation continued to rise. I’m exhausted at the thought!
Despite all of this, many first homebuyers managed to nab their first home with our professional help, while others sold their homes above asking price and were able to successfully relocate, downgrade or upgrade their home for a fresh new start. What a time! But where is this all going? Let’s take a look.
Due to the increase in interest rates, borrowing capacities reduced by approximately 25%. What does this mean? Now lenders will let you borrow 25% less than they would have before the interest rate rises.
Buying and selling intentions have slowed as a result of the rising interest rates and reduced borrowing capacity, leaving overall confidence at recessionary levels. In early 2023, there are actually less buyers and therefore, fewer sales. The selling process is also taking a little longer than it did just one year ago, affecting overall sentiment.
Sales volumes and listings
Again due to increasing interest rates and fallen consumer sentiment, sales volumes seemed to slow right down by the end of 2022, returning to pre-COVID stats. Though demand to purchase remains strong, buyers are more reluctant to ‘jump the gun’ seeing as interest rates are increasing by the month and the industry continues to face uncertainty. Properties are also taking far longer to sell.
It seems the uncertainty faced by buyers is shared by those who are selling, with property listings in November 2022 being less than any November on record, besides those in 2019-20 when COVID affected sales.
Rent on the rise
Property prices may have dipped at times, but it seems rent continued rise to this past year. In 2021, rent increased by 4.7% nationally, but by 2022 it had increased by 6.7%. In the regions however, it seems rent slowed from 10.5% to 7.1%, before rising in the cities from 0% to 8.9%. That’s huge, and it’s certainly a contributing factor to the changing face of the property market we see today.
Rental vacancy rates are at a historic low, and reopened borders have also added to rental demand, despite supply being under strain.
In Australia, for years homeowners dreamt of a ‘sea-change’ or ‘tree-change’. Now that society is largely back to normal following lockdowns and government restrictions, the desire to leave the cities or suburbs has decreased, and more people are looking to rent in major hubs like Sydney and Melbourne. Who would have thought?!
Now as I look forward to what’s to come in 2023, I predict escalating demand and tight supply where rentals are concerned, rent increases, and the current trends in buying and selling to continue.
In the long term however, as prices inevitably decline, interest rates begin to stabilise, and wages grow once again, I foresee an improved property market with more vendors willing to list and buyers ready to pounce on the property of their dreams. Will we see more transactions? Absolutely.
And as for investors, will we see a resurgence of landlords renting out their latest investment properties? You bet! This will help to relieve some of the supply issues we are seeing in the rental market right now, leading to better prospects for renters and those wishing to buy in the near future.
If you’re looking for one buyers agency with the know-how to make your property dreams a reality despite the turbulent market, our buyers advocate agency can help! Give us a call on (02) 8916 6172 or email our team at firstname.lastname@example.org for more information!