Connect with us

Commercial News

House Prices Increase Per Cent in 2023

Published

on

Prices Per Cent

Despite potential rising interest rates, house prices could soar again in 2023 due to the persistent low rental vacancy and a recent influx of immigrants into Australia.

SQM Research paints a contrary picture for the housing market next year, starkly contrasting to estimates from Commonwealth Bank and Westpac that anticipate further price decline.

With the Reserve Bank poised to put a halt to interest rate increases in mid-2023, Louis Christopher of Propertyology predicts an impressive five-nine percent capital city growth come year’s end.

“Australian capital city dwelling prices will commence a recovery in 2023 as a result of a pause in the rise of interest rates we can expect to occur by no later than June 2023,” he stated.

Westpac and ANZ anticipate a series of interest rate hikes over the coming months, with the Reserve Bank potentially propelling the cash rate to an unprecedented 11-year high by May. 

With rates already at a 10-year peak of 3.1 per cent, this would mark quite a dramatic change in market dynamics – something that economists are keeping their eyes on. 

Read also: UK economy plunges further from prediction

Potential Increase in Prices Per Cent

SYDNEY: Up 8 to 12 a cent

MELBOURNE: Up 2 to 6 a cent

BRISBANE: Up 3 to 7 a cent

ADELAIDE: Up 1 to 4 a cent

PERTH: Up 9 to 13 a cent

HOBART: Up 0 to 4 a cent

CANBERRA: Minus 3 per cent to 2 per cent

DARWIN: Minus 4 per cent to 1 per cent

The Bank of Australia recently reached unprecedented heights, with its cash rate peaking at an all-time low and inflation skyrocketing to 8 per cent. 

In the face of looming economic uncertainty, however, experts have forecasted that rate cuts could be coming in the latter half of 2023 – a potential lifeline for those affected by rising prices.

Predictions in the 30-day futures market suggest interest rates could reach an all-time high by August and remain untouched until 2024.

According to Christopher, the end of rate hikes will signal an upswing in property prices come 2023. This suggests a return to positive growth after several years of monetary policy tightening.

In Sydney, rent prices have rocketed by almost 30 per cent in the past year alone – reaching an all-time high of $711.65 for a typical house or unit. Given current trends, renters can expect further increases next year ranging from 8 to 12 percent. 

“Sydney is expected to lead the recovery,” Christopher said.

“This recovery in Sydney will be driven by the surge in underlying demand for residential property as a result of the rise in overseas arrivals, the return to the office, the existing shortage of rental accommodation, the new stamp duty/land tax changes and the expected ongoing strength of the Sydney economy.”

New Policy

With the NSW Coalition government attempting to make it easier for first-home buyers to purchase property, they have introduced a policy that allows residents an annual option instead of paying hefty and upfront stamp duty fees. 

However, Labor plans on abolishing this program should it win in March 2023 – leaving hopeful homeowners back at square one.

Home buyers in Brisbane may have the edge over other major cities like Melbourne and Adelaide, with prices predicted to jump significantly higher than anticipated. 

In 2023 alone, residence costs could soar between three and seven per cent – dwarfing the two to six per cent rise expected for Australia’s second biggest city as well as Adelaide’s modest one-to-four boost. 

Perth was predicted to experience a remarkable growth of up to 13%.

SQM Research predicted a peak in the Reserve Bank cash rate under four percent and inflation rising up to, but not surpassing, an all-time high of eight per cent. Additionally, SQM foresaw the potential for more rate cuts during 2023’s second half.

“No doubt it will be a very challenging year for the RBA to walk their tightrope and pull off a soft landing for the Australian economy,” Christopher said

“However, contrary to current popular opinion, I believe they will manage to do just that. If the target rate stays below four per cent, then it is unlikely we will have a flood of forced sales in the housing market.”

If the Reserve Bank doesn’t reduce rates next year, SQM Research still forecasts that property prices will increase – albeit at a more moderate rate of 3 to 7 per cent.

Cambridge Analytica: Meta to pay $725m penalty

Under Specific Scenario

Property prices in Australia’s major cities have seen an upswing, with Sydney seeing the biggest jump – a range of five to nine percent. Melbourne and Brisbane rose by one to five per cent, respectively, while Perth notched four to eight percent.

Major financial institutions are cautiously optimistic about home prices while expecting the mid-year rate hikes to cease.

Westpac forecasts a substantial Sydney housing market slide with prices dropping 8 per cent by 2023, while Melbourne’s already experienced an even more significant 10 per cent decline.

Property prices in Brisbane and Adelaide will experience a significant 6 per cent decrease next year, while Perth’s real estate markets face a slightly softer 4 per cent decline.

With the cash rate having recently risen to 3.35 per cent, the Commonwealth Bank is looking ahead, expecting this monetary policy tightening cycle to be at its end. Despite recent house price falls, they remain nonplussed and optimistic about a secure economic future.

With Australia’s home loan industry leader forecasting prices in Sydney to remain stagnant over the next few years, suburbs around Melbourne have experienced a descent of two percent while Brisbane and Adelaide dropped by six and seven per cent, respectively. 

Similarly, Perth property values saw a decline of five percent since last year.

Photo: On the Market

Continue Reading
Advertisement