Property prices in Australia are forecast to rise again in 2023. According to a recent study, the property market is expected to recover by then, with prices in Sydney predicted to increase by 5 to 9% by the end of next year. This is welcome news for those who already own property – or are thinking of investing – as it means that their investment is likely to grow in value over time. In this article, we will explore the reasons behind this forecast and take a look at how property prices have changed over the last few years.
The current state of the Australian property market
The Australian property market has experienced a period of sustained growth over the past decade, with prices outpacing inflation significantly. This is largely due to the comparatively low interest rates that have been maintained since 2009. However, this has recently been slowing down and there are areas in which we can observe property prices being stagnant. This can be attributed to multiple factors such as poor economic conditions, difficulty obtaining credit from banks and changes in interest rates. With interest rates reaching historically low levels, Australians are seeking out more affordable properties, leading many to leave major metropolitan areas in search of cheaper housing options outside of the city limits.
At the same time, an increasing number of people are choosing to rent rather than buy a home due to these financial challenges. These trends are likely to continue for the foreseeable future as the Australian property market works its way through an uncertain period. The maintenance of interest rate stability is essential for keeping property demand strong and helping to ensure that average housing prices remain within reach for most Australians. As we move ahead into 2023 it will be interesting to observe how the market continues to evolve given these challenging conditions.
Why prices are forecast to rise again in 2023
Prices have been rising and falling over the past few years, but 2023 is forecast to see a rebound. This rebound in property prices is largely driven by supply constraints due to production disruptions caused by the COVID-19 pandemic, combined with strong global demand. Many industries around the world are still struggling to bounce back from the pandemic and are finding it challenging to meet the increased demand quickly enough. This has led to higher costs for raw materials, labour, and transportation, all of which drive up prices.
Furthermore, rises in inflation resulting from an increase in people’s spending power place even further pressure on property prices as manufacturers need to raise their prices in order to remain profitable. As such, prices across all sectors are likely to rise again in 2023 as supply fails to keep pace with demand. Though this rebound may be short-lived, it could provide some much-needed relief for businesses trying hard to recover from a tumultuous last few years.
The impact on home buyers and sellers
Changes in interest rates tend to have the most impact on home buyers and sellers. Generally speaking, when interest rates drop, more people are interested in buying a house. With lower interest rates, the same mortgage can be financed with less money out of pocket and so more people are able to qualify for larger loans. As interest rates decline, home values tend to rise and the overall market can become much stronger.
Conversely, when interest rates rise, fewer people are able to qualify for larger loans and so demand for homes drops. This decrease in buyer demand leads to lower home values, thus reducing the amount that sellers can receive from buyers. Therefore, an interest rate increase could mean selling a home for less than expected or paying a greater amount out of pocket at closing time. These fluctuations in interest rates can create significant changes in the financial situation of buyers or sellers and should be taken into account before entering into any real estate transaction.
How to get ahead in the property market
When it comes to getting ahead in the property market, knowledge is key. If you have a good understanding of the market and the many factors that affect real estate prices, you can become better positioned to make sound investment decisions with confidence. First, learn about the different types of properties available and which ones are most likely to experience price appreciation over time. Research local trends like infrastructure projects in development or population growth, as well as demographic shifts that may affect supply and demand in your area. Understanding basic concepts like mortgage payments and interest rates will also serve you well when evaluating investments. Finally, be sure to stay up-to-date on the competitive landscape by comparing listing prices, watching for changing metrics like vacancy rates and keeping an eye on sales performance in the market overall. With a mix of strategic planning, research, and patience you can successfully navigate the ever-evolving landscape of real estate investing.
What help is available for first home buyers?
Enigma Home Group is the perfect place for first home buyers to turn to when they are ready to start their journey into the property market. Our team of specialists are well-versed in helping first-time home buyers figure out what steps they need to take to ensure a successful purchase.
For example, we strongly recommend that potential first home buyers budget appropriately and realistically before beginning the search for a new home. Establishing a budget ensures that each individual knows exactly how much they can spend and can help them focus on properties that fit within their price range. Just as important as setting a budget is being realistic about location – understanding property values in various parts of town will be key to finding the right home for an affordable price.
We also encourage clients to take advantage of government assistance options, such as grants or loans from the First Home Owner’s Grant scheme. Enigma Home Group’s team of experienced team members are available at every step of the way so first-time home buyers feel secure throughout the process – from researching properties to signing contracts and dealing with banks and solicitors.
Take the Enigma Home Group Eligibility Quiz today to see if you qualify.
Conclusion
The Australian property market is forecast to experience significant growth in the next few years, with property prices predicted to rise again in 2023. This is good news for sellers but may be cause for concern for first home buyers. If you’re looking to get ahead in the property market, it’s important to understand the factors that are driving these price increases.
