Projections for the 2023 Australian Housing Market

2022 was a tumultuous year for the property market, serving up some major talking points, many of which we are still seeing the effects of in 2023.   

Prices went down while rent and mortgages went up, and the federal government made a promise to ease some of the ongoing stress in the housing crisis. Data from PropTrack shows a 6.7 per cent rise in the advertised price of rentals in Australia over the previous 12 months. Following the historic property boom seen in 2020-21, the housing market has been experiencing an adjustment phase which has many questioning what 2023 has in store.   

Every state and territory is being impacted, with property values rising in some and falling in others. Projections for the housing market will rely heavily on where people are looking to invest, and there appears to be a split between metro and regional areas which must be considered in any investment.   

Property values grew considerably over the course of the pandemic in capital cities, prompting many to leave the hustle and bustle of the city and move to more remote and regional areas.  

 Regional property has come back 2.2 per cent since peaking in April 2022.  With many city-dwellers moving to regional areas over the pandemic now considering moving back in this post-lockdown world, we are likely to see more empty properties in regional areas, though the arrival of students and migrants from overseas may outweigh this.   

Inflation has ravaged the economy in 2022 and with the cost of living rising, people are understandably hesitant to invest in property.  

Affordability issues will constrain buyers in 2023, however, there are positive signs of recovery for prospective homeowners as unemployment sits at a record low and the job market remains full of opportunities. All of this points to the likelihood that more people will be able to consider entering the housing market, despite the uncertainty around the erratic mortgage rate projections.  
  

Despite the concerns surrounding inflation, property prices in Melbourne and Sydney are forecasted to drop by 6-6.5 per cent. This comes after an even larger drop of 12 per cent and 8.5 per cent in 2022 – which may be good news for potential buyers.   

Unfortunately, the housing crisis is expected to continue. Rent is expected to remain high, with available properties scarce. The national vacancy rate is at its lowest point on record at 0.8 per cent as of November 2022. Adelaide is at the lowest at 0.3 per cent, while Melbourne and Sydney sit at a record low of 1.1 per cent. There is little new construction in the pipeline and there are simply not enough homes to go around. With international borders now open and immigration on the rise, this is likely to put additional strain on the housing crisis.   

To hopeful homeowners, 2023 is looking like a promising year to pursue this goal as the rental market becomes less tenant friendly and increasing competition is raising pricing and decreasing standards.