Following a dramatically slowing property market in 2022 compared to 2021, we are now set for a strong turnaround in growth this year with the Sydney and Melbourne property markets forecast to achieve moderate to robust growth in 2023. Despite media headlines stating that the Australian property market was crashing in 2022, it was only Sydney and Melbourne that experienced moderate declines - (9.1%) and (6.1%) respectively for housing and (6.2%) and (7.2%) respectively for units. However, the outlook for the 2023 market is considerably more favourable than what most media outlets will have you believe.
Australia is currently short 1,000,000 homes said Dr Andrew Wilson, Australia's leading independent property economist and former chief economist of the Domain Group. The cash interest rate will likely only increase to 4.5% after last week's 25 bps increase by the RBA. On top of this there are currently 1,000,000 visa applications to migrate to Australia permanently from overseas however, the Australian Government will only allow 200,000 per annum. China has also recently banned online learning encouraging students to return to Australia to complete their education face to face. This has created the perfect storm for the Australian property market that is struggling to keep up with the demand for property in a post covid economy.
"Most of the negativity in the market is coming from the media" Wilson said with 3 consecutive months of 50 bps interest rate increases which is unprecedented. But we have the strongest national economy in history right now with record low unemployment at 3.5%. The only thing stopping capital growth is interest rates, but confidence is returning now with record retail sales. "Click bait headlines are always wrong" Wilson went on to say and he gave a final warning to not miss the boat again.
When we look at the Australian property market over a 2 year period (2021 and 2022) the results are a lot more optimistic and put the media headlines of 2022 into perspective. Brisbane was the stand out with a 34.6% increase in the median house price driven by the southern states moving north to avoid lock downs.
Wilson who is one of the most accurate economic forecasters when it comes to property has predicted that we will see moderate to robust growth in 2023 with Perth and Melbourne leading the charge in housing at 7.0% growth mid range forecasts and Adelaide, Brisbane and Hobart with 8% mid range growth in units.
You should always invest where demand outweighs supply and Australian property is an asset class that if you choose to ignore you will do so at your own peril.
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