What to expect in 2023? A common question among many Australians as we enter the new year, the housing market transitions from a once-in-a-generation pandemic growth phase to a multi-speed adjustment one.
Australia’s residential property market is worth $9.7 trillion today after growing at its fastest annual rate ever in 2021. However, with surging inflation and rapidly rising interest rates, the Australian property market slid into a downward trend. In 2022, national dwelling values dipped -0.9%, marking the first annual decline since October 2019!
Australians also witnessed consecutive rate hikes last year, with the RBA raising rates to 3.1% – the highest level since December 2012. In terms of how high the cash rate will rise, it remains a contentious issue.
In its statement, the RBA left its options open, saying, “The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”
According to the “big four” banks, market activity will continue to slow down in 2023. Westpac predicts that the cash rate will peak at 3.85 percent by May this year, but it does not expect the housing market to rebound until 2024. However, the Commonwealth Bank (CBA) holds a more positive outlook predicting house prices to continue to fall 15 per cent from the April peak to the trough in the middle of 2023.
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While overall the Australian property market is in a downturn, not all the states’ property markets will be impacted equally. The property cycle is different in every state, and within each capital city, there are several markets where property values are falling, stagnant, or even rising.
Adelaide and regional South Australia have been the strongest and most consistent performers throughout the unpredictable 2022. Since November 2021, Adelaide dwelling values have risen 13.4%, while rental values saw a rise of 12.8%.
Known as the Silicon Valley of Australia and a world leader in alternative energy development, Adelaide is ranked as the 3rd most liveable city in the world. Furthermore, South Australia’s property boom is unrelenting, with some suburbs in Adelaide experiencing a 70% increase in value in the last five years.
Homeowners in Glenunga, St Georges, Clarence Park, Kensington and Linden Park can also be ready to reap the benefits. Median house prices in these suburbs have increased by more than 70 per cent in the past five years.
Here is Adelaide’s price trend over the past 12 months
Source: Corelogic Report
With its attractive lifestyle, extremely low stock levels, solid buyer demand, and record-breaking migration, it is no wonder Adelaide will be a real estate investor’s dream this year!
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Disclaimer: Ouwens Casserly has relied upon information from external sources in compiling this publication. Ouwens Casserly does not warrant its accuracy or completeness and does not accept any loss or damage sustained by readers, or by any other person or body corporate arising from or in connection with the supply or use of the whole or any part of the information in this publication through any cause whatsoever.
