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What’s ahead for property markets this year?
property markets

2022 was an interesting one for property markets around the nation, with the savviest homebuyers and investors making the most of the changed market conditions.

Buying when others are not, as long as you are strategic with your asset and location selection, has always been a sound strategy – you have to recognise short-term trends as exactly that – even though they may be unsettling at the time. 

The power of negative press is not to be underestimated. If ever there was a time to block out the white noise and remember that everything works in cycles and the best time to carry on with your investment plan it’s now. 

The early parts of 2023 are a real window of opportunity while some property markets take a breather and there is less of a frenzy out there. 

Having said that, many of Australian property markets remain super active and are most definitely not slowing down. 

Key drivers

In the meantime, there is “talk” of interest rates going down again next year, but that remains to be seen and no one has that crystal ball.  

At some stage interest rates will stop going up. They are merely ending the fiscal support and stimulus measures introduced to help us navigate through COVID.

Many of the inflationary “problems” being experienced are a result of massive demand from rampant economies and material supply shortages in part due to global events that are temporary. 

We are already seeing news articles detailing that these supply issues are easing.

Which factors will impact markets the most?

Moving into 2023, we have a number of factors of interest that affect the nation’s housing markets. 

The first is the severe shortage of rental properties. This will be the real story of 2023. Rather than directing the blame where it should be directed, greedy investors will no doubt get the blame by those who don’t understand where this shortage came from and that it’s been years in the making.

Many investors sold out during 2022, investors are slow coming back and the borrowing capacity of many has dropped with the rising rates.

The shortage won’t end anytime soon, and rents will continue to increase over the coming 12 to 24 months. Vacancy rates are some of the lowest we’ve ever seen.

The real shortage of quality listings is still a problem but have also kept the supply and demand balance.

Developers are deferring projects, home building is down, and the construction industry is struggling with a labour and material shortages, meaning that many developments are not going ahead, which in turn means we are already in, and heading into, to a housing supply shortage right at the time when demand will pick up.

Migrants are being lobbied back into the country – they’ve raised the cap on skilled visas – and students are coming back, which creates more and more demand as they settle and buy new homes and rent properties. Where are all these people going to live? There’s already a housing shortage.

There is a huge infrastructure spend under way across the nation, creating and keeping people in jobs, which in turn creates demand for property in strategic areas.

All of this points towards the fact that Australian prices will rise in 2023, but to what extent no one knows.

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