The year 2022 is coming to a close, and with it comes reflection on the Australian real estate market. It is always a hot topic of discussion, with everyone having their own opinion on where it’s headed.
So, we thought we’d take a look back at the ups and downs of the market over the past few years and see what house price predictions are prominent for 2023.
Quick review on the Australian property market outlook 2021
The property outlook on the Australian real estate market back in 2021 was hopeful after a very tough 2020, which was the first year the Covid-19 pandemic hit. It started strongly with a national price increase of 0.9% in February, resulting in a surge of first home owners and owner occupiers making up the majority of buyers.
The housing and property prices across the country soared aggressively in 2021 that for the first time in Australian history, the median house price peaked at more than $1 million.
Australian property market outlook in 2022
Experts consider 2022 to be the start of the adjustment phase of the property cycle, following the steep upswing in the Australia housing market the year prior.
The Australian housing market overall is in a downturn, with the average house price Australia 2022 at $940,000 — evidently lower than that of 2021. As of the November property market update, Gold and Sunshine Coasts, which have enjoyed tremendous booms in terms of property values during the pandemic lockdown, are heading towards a fast decline in values.
This year’s successive cash rate hikes since May, decline in consumer confidence, and rising costs of living due to the strong inflation surge are seen as the leading factors having the biggest impact on house values falling by nearly -16% since April.
Housing news Australia: One major real estate market trend that is observed nationwide is that renters are grappling with the current rental housing crisis due to soaring interest rates, low vacancy rates, rising dwelling prices and rents, and more rejections on rental applications. This has resulted in an increasing number of displaced Australian occupiers and cases of homelessness.
This year’s property market outlook was also largely coloured by the loud and apparent talks on the impending recession and the ongoing geopolitical problems overseas. This further dampened the enthusiasm of sellers and prospect home buyers.
The cash rate hikes have contributed to the property values increasing by 20-30%. This did not only increase the monthly mortgage repayments for millions of homeowners: it also effectively limited the affordability of properties + the cash amount an average buyer is willing and able to part with. All of this further compounded the mortgage stress already felt since the start of the year.
On the positive end of the latest property news Australia: our economy is still growing, wages are increasing, and unemployment is at historically low levels. International immigration is also picking up to help solve the labour shortage problems in the country. In addition, the government has a long list of first home buyer grants to encourage home buying pursuits. All this may become an impetus for an increase in construction activities to put up more houses for selling, buying, and renting.
Let’s answer the most frequently asked questions on the Australia real estate market this year:
Will house prices drop in 2022 Australia?
Below is a graph showing the Australian property outlook in terms of house price movements in all major cities from 2020 to 2022. Having risen considerably in 2021, some capital cities like Sydney and Melbourne are declining in dwelling prices, furthering the sentiment among experts that we are entering the adjustment phase of the property cycle.
Will the housing market crash in 2022 Australia?
This is a hot and polarising topic among real estate experts. Many commentators warn about an impending market crash, while others beg to differ.
An optimistic house prices forecast tells us that the rise and fall movement we are seeing in this year’s real estate market is part of the adjustment phase of the property cycle we are currently in. The employment levels are not an alarming rate, and mortgage rates albeit on the rise are not off the charts.
Overall values are 6% lower than their peak — far from a property market crash, optimists say this is a mere orderly correction.
Sneak peak on 2023 property market outlook
Here’s the Australian property market forecast for 2023. We can expect:
- more RBA cash rate hikes as the institution continues its efforts to control the inflation — possibly slowing to 4.7% over 2023.
- Australian house prices to go lower
- a continued demand for more property from prospect home buyers
- more investors to enter the real estate market with rent prices still jacked up due to an ingress of more immigrants and students returning home from abroad
For a more comprehensive report on what to expect for 2023, click here.
Got more questions? Ask the expert Gold Coast brokers at Professional Lending Solutions
As always, there are a range of predictions – but one thing is for sure, no-one has a crystal ball. The mortgage brokers at Professional Lending Solutions suggest you consult with an expert to get a tailored prediction for your specific situation. They can help you understand the market conditions and give you an idea of what to expect in 2023 – whether that’s good news or bad!
Here at PLS, we will help you keep on top of the latest real estate trends through our blog and social media updates. Wishing you all the best in whatever property journey you choose to embark on next year.
Phil’s journey from banking to mortgage brokering reflects a career driven by a commitment to personalised service and tailored financial solutions. With a distinguished background in banking, including roles at NAB, ANZ and Lloyds TSB Bank in the UK, Phil spent 12 years developing expertise in personal and commercial finance, while also completing a Bachelor of Business (Finance), followed by an MBA majoring in International Business.