Could the market cycle ‘turn again’ in 2023?

When compared with the current conditions, looking back to 2021 can feel like observing a completely different Australian property market. 

During that time, the low-interest rate environment has made borrowing money more affordable for buyers, which has driven demand for properties.

Additionally, government stimulus measures, such as the HomeBuilder grant, have further incentivised buyers to enter the market.

Furthermore, the COVID-19 pandemic has also played a role in driving demand for housing. With lockdowns and remote work arrangements, many Australians have been seeking more space, and some have decided to move to regional areas or buy bigger homes. This has led to a surge in demand for properties across the country.

As a result of these factors, the Australian property market has seen increased competition among buyers, leading to higher prices and faster sales. This has created a seller’s market where properties are selling quickly, often for prices that exceed their initial asking prices.

But while the country’s property market entered a downturn period at the start of 2022, thanks to a raft of factors, including Reserve Bank’s rate rise cycle, high inflationary pressures and weakened consumer sentiment, Angus Raine, the brand’s executive chairman, said that there are signs that the market is set to enter a new phase in the cycle. 

He highlighted that the “lack of listings” has been a stumbling block for real estate activity over the last year.

However, he noted that the numbers of owners listing their properties for sale last month were near levels observed during the same per cent a year ago and almost 4 per cent stronger than the bull markets two years ago. 

“In markets such as Hobart, appraisals and listings are more than 50 per cent higher than a year ago, while listings are also up by more than 50 per cent in Darwin. 

“So, it’s pleasing to see vendors across Australia are still confident about the prospects for our favourite asset class and are seeking appraisals and listings and a possible sale, most likely before the Easter break. 

“These numbers tell me that there is a belief the market cycle will turn again in 2023.”

To further add weight behind his optimistic outlook, the executive cited the latest data from CoreLogic, which showed national dwelling values recorded its smallest month-on-month decline since June last year. 

In the report, CoreLogic’s research director, Tim Lawless, said that although the housing downturn remains geographically broad-based, there are signs that some momentum has left the housing downturn.

“The quarterly trend in housing values is clearly pointing to a reduction in the pace of decline across most regions; however, at -1.0 per cent over the month and -3.2 per cent over the rolling quarter, national housing values are still falling quite rapidly compared to previous downturns,” the expert stated.

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