LJ Hooker’s Head of Research, Mathew Tiller, said “ Home owners have adopted a wait-and-see approach and as a result, the number of new listings coming onto the market, particularly during the traditionally busy spring selling period, has been very low.
Shifting economic conditions and demographic changes will influence how Australians buy and sell property over the coming year, according to the LJ Hooker 2023 Trends Report.
The iconic real estate network has identified four areas expected to evolve over the next 12 months as we move through to the next phase of the property market cycle.
These are:
LJ Hooker’s Head of Research, Mathew Tiller, said the property markets across Australia have transitioned through a wide range of conditions over the past two years. With buyer demand softening due to affordability and rising interest rates, the behaviour of vendors has also been changing.
“Homeowners are reluctant to sell their properties, instead, they continue to seek advice about market conditions and are watching in anticipation of the next upswing,” Mr Tiller.
“They have adopted a wait-and-see approach and as a result, the number of new listings coming onto the market, particularly during the traditionally busy spring selling period, has been very low.
“So we have identified a new trend which we expect will continue in 2023, where people are more eager to understand what is happening in their local market. This also means having their property appraised more regularly as they carefully watch for signs of the next market cycle phase.”
Increased construction costs are expected to persist into late 2023, making newly renovated or recently built homes even more popular in the coming year continuing another trend.
While lockdowns may be behind us, the pandemic is still shaping how and where we live. Properties designed for relaxation, enjoyment and remote work are expected to rate highly with buyers in 2023.
Mental and physical health will continue to be a priority, as it has been since the outbreak of Covid-19, with people continuing to look to relocate interstate and to regional areas. While this trend has slowed in 2022, movement levels will remain significant over the short term.
“Population shifts will drive market performance and keep rental markets tight in 2023,” Mr Tiller said.
“Whether it’s people looking for more affordable housing options outside our capital cities, moving between capital cities for work opportunities or into a smaller regional community to get away from the hustle and bustle, it will have a major impact on the market.”
According to the ABS, Queensland attracted the most interstate arrivals, with 148,372 people moving to the state from within Australia during the 12 months to March 2022. NSW ranked second (108,727), followed by Victoria (90,917) and Western Australia (44,310).
“More people have purchased caravans, leased their homes and taken to the road to travel,” Mr Tiller said.
“This, in turn, has seen smaller regional and rural centres become popular, a rise in short-stay accommodation and a boon for local business.”
International arrivals are expected to grow over the coming year. This will also, in turn, put increased demand into our property markets from both a tenants’ and buyers’ perspective.
The tightness in Australian rentals was exacerbated by many investors selling their properties over the past two years to capitalise on strong capital growth. And while this doesn’t sound positive for tenants, there is some good news in the coming year.
The rise of rents at a time when sales prices are softening will see some renters who have been budgeting to buy a home bring forward their purchasing decisions.
“Higher days on the market and vendor discounting will make it easier to leap from being a renter to homeowner over the coming year,” Mr Tiller said.
The strong rental price growth combined with declining home values has pushed rental yields higher. The combination of these factors, along with the positive outlook for rental markets over the medium term, will inevitably see investors return to purchase more properties in 2023.
Agent Sam Linn from LJ Hooker Alice Springs said rising interest rates had been slowing investor enquiry, however, properties in the regional hub offer good returns. It is possible to secure a one or two-bedroom apartment for around $200,000 returning between eight to 10 per cent. These can be leased for $350 to $380 a week.
Among his clients, is Mick Trull, a 42-year-old local accountant, who will be looking to add to his portfolio in the coming year. His most recent purchase was an older-style three-bedroom home in Alice Springs, on a potential development site, purchased six months ago for $470,000. It is currently tenanted and has a rental income of $500 per week.
“Low-interest rates over the last few years have been completely out of the ordinary, so I built up a buffer and paid down debt,” Mr Trull said.
“Often ideal properties might come up when others are feeling negative in the current market – my advice is to keep an eye out for properties that come up where you can add long-term value too.”