Australian property prices are expected to decline 7%-10% in 2023, according to the latest analysis from PropTrack. This is a significant decline from the 2.3% drop observed in 2022, with Sydney (-8% to -11%), Brisbane (-8% to -11%), Canberra (-8% to -11%), Melbourne (-7% to -10%) and Hobart (-7% to -10%) expected to have the largest falls. The Reserve Bank's 'hawkish' interest rate rises are driving the downward trend and will continue to do so into 2023. This will have a material impact on the housing market, with prices likely to fall further still. Households in Australia are still reliant on their houses to survive financially, and the fact that most mortgage debt is on variable rates is making them vulnerable to rising interest costs. This will eat into demand for properties, but the slowdown should also be good news for property investors as it could make it cheaper to get their hands on residential real estate. While prices are expected to fall in Sydney, Melbourne and other capital cities, the australian property market outlook for rental growth is better than anticipated. Strong rents could boost demand, particularly in areas where immigration restrictions have made homes unaffordable and people prefer to work from home. This will give a lift to apartment markets, with some inner urban areas that previously had little or no room for new construction becoming more attractive, as the record price gap between houses and apartments narrows. It will also be good for first home buyers as it will become more affordable to upgrade from a unit to a house. It is also forecast that housing affordability will be even better in regional NSW, where demand is driven by lower house prices and preferences for working from home. This will help to stimulate investor activity and support local governments by reducing redevelopment pressures on infrastructure, especially in places like Newcastle and Wollongong where population growth will be more evenly distributed. Despite the downward trend, many homeowners are holding onto their properties or looking to sell. This is particularly true of properties in areas with falling prices or higher refinancing rates, as sellers are unwilling to risk losing their equity. Learn more about australian property market on this page. Although the number of homes listed for sale has declined in Sydney and Melbourne, auction clearance rates remain steady with preliminary clearance rates averaging in the 60 per cent range. The decline in property prices is slowing and asking prices are holding steady or increasing. A resurgence in inner city apartment building approvals is also providing a boost to apartment markets, with high density living gaining in popularity with the influx of baby boomers and those looking to downsize from larger family homes. These designs feature low maintenance vertical landscaping and rooftop terraces which are more convenient for tenants to use than suburban backyards. While the downturn in property prices will be gradual, the market will eventually hit a lull as the credit availability issue drags. The biggest fall is forecast for Sydney as a result of tighter credit conditions, but this will vary widely across the country. To get more enlightened on the topic, check out this related post: https://en.wikipedia.org/wiki/Real_estate.
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The Australian property market is entering a new phase. It is moving from a once-in-a-generation property boom to a multi-speed adjustment period, where house prices are expected to fall by 7-10 per cent in 2023. Price falls of this scale could make a significant dent in affordability, but a substantial reversal would be required to see housing become affordable again. The CBA, AMP, ANZ and Knight Frank have all said that average home prices would have to fall between 25% and 45% in order to make Australian housing affordable again. While house price declines will vary among states and territories, they are also likely to be dragged by a tightening of credit availability as the Reserve Bank of Australia continues to tighten its monetary policy. This tightening cycle will likely drag on borrowing capacity and, in turn, stifle buyers' ability to bid up property prices. In terms of where prices will decline, PropTrack's property market outlook predicts that the biggest drops will occur in Sydney and Brisbane, which are expected to lose between 8 and 10 per cent of their value by 2023. Canberra, Melbourne and Hobart are predicted to also see declines of between 7 and 10 per cent. Despite the current market decline, there is a clear opportunity for investors to take advantage of rising rents and rental yields with Hunter Galloway. Specifically, regions that have experienced rapid growth over the past couple of years and are now in an expansionary mode will be attractive to potential buyers. These locations will also have high walk scores, which means they offer a wide range of amenities within a short walking distance or drive. This is especially true of lifestyle suburbs, which offer a premium as a result of their accessibility. As work-from-home preferences continue to emerge and employment prospects improve, suburbs such as Geelong, Bendigo and Ballarat will experience population growth on par with capital cities. These areas will be more appealing to young professionals, and the demand for these types of homes is expected to continue growing as the economic recovery gains momentum. While a rise in demand may slow down the housing price declines, it's important to remember that house prices are still very much above pre-pandemic levels. In fact, a peak-to-trough decline of 15-20% is still possible, according to ANZ senior economist Adelaide Timbrell. What's more, a slowdown in housing market activity would be a good opportunity for sellers to list their properties at a lower price, providing they are confident about the future of their property. This is because a slowdown in the economy and tightening of interest rates could encourage buyers to bide their time and wait out the housing market. For more details, see page. In addition to the ongoing rate hikes, another factor that is causing a slowdown in the housing market is a lack of supply. With the number of houses on the market currently 31.5 per cent below its five-year average, and 2.9 per cent lower than in January 2020, it's clear that sellers are reluctant to put their homes on the market at this stage of the cycle. For more information, check out this related post: https://en.wikipedia.org/wiki/Real_estate_trends. Property markets across the country have cooled since their 'pandemic' peak. However, there's still a lot to like about the australian property market at present. Australia's housing market has reached its highest point in more than a decade and, in many parts of our largest capital cities, house prices are still in the seven-figure mark. Brisbane, Canberra and Melbourne have all seen price growth at record levels, while more than 400 suburbs have joined the million-dollar club. A 'crash' in property prices is unlikely at this stage, thanks to the strong economy and low unemployment rates. Homebuyers are generally holding onto their properties and not selling, unless they're being forced out by mortgage repayments rising too high or a job loss. There is a reason for this: the 'pandemic' raised interest rates too high and mortgages are becoming more expensive, which is putting a dampener on demand. This has weighed on sales, which have been weaker than usual for the year to date. According to CoreLogic's Best of the Best report, home listings have also taken a hit as homeowners continue to hold on to their properties and refinance at higher rates. New listing activity is down 26.3% compared with 12 months earlier, while total stock in Sydney and Melbourne fell by 9.8% and 11.7% respectively. Another factor that could lead to a fall in property prices is the Reserve Bank of Australia's expected two 25 basis point cash rate hikes this year, which will push borrowing costs higher than ever before. This will slash borrowers' borrowing capacity and increase the risk of property price falls, according to PropTrack's 2023 Housing Boom and Bust Report. The report suggests that this will primarily be felt in Sydney and Melbourne where affordability is highest, but will also impact on other major capital cities, with Perth, Adelaide and Hobart likely to feel the effects of the 'rate-ademic'. Despite the 'rate-ademic', CBRE predicts that rental demand will continue to outstrip supply as immigrants resume post-COVID and owner-occupiers and downsizers look for more affordable apartments. The company expects apartment rents to rise by circa 30% over five years in the major capital city markets, with residential apartment construction set to be around 45% below the 2017 peak. This is due to a combination of factors including tight rental vacancy rates, strong demand for new apartment developments and surging development costs, which are cutting the amount of apartments being built. In addition, foreign investors will continue to play a key role in our market and are forecast to invest AUD44 billion over the next five years. There are a number of reasons for the australian property market outlook for property prices to be positive, but it's important to remember that the market is still relatively fragmented and different sectors will respond differently. For instance, 'lifestyle' areas and coastal and lifestyle suburbs are likely to perform better than more traditional inner and middle ring suburbs. This is where the biggest opportunities lie for buyers - those looking to purchase a home that they can live in comfortably for a long time and enjoy. These locations will also be favoured by buyers who want to be able to renovate and add value to their properties in the future. If you want to know more about this topic, then click here: https://en.wikipedia.org/wiki/Real_estate_economics. |
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