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2023 Market Forecast

Happy New Year! We hope you had a fantastic holiday season. 2022 was a tough year for many borrowers with continued rapid rate rises and a dramatic decline in the property market. Will this trend continue for 2023? We take a look at what the predictions are below.

Home Values

Housing values across the country responded sharply to the RBA’s interest rate hikes in 2022. They moderated between September and November and values ultimately finished the year on a weaker note. According to CoreLogic’s national Home Value Index, values fell -1.1% in December, taking them -5.3% lower over the course of the 2022 calendar year.

This is the first time since 2018 that national home values have fallen over a calendar year, and it marks the largest calendar year decline since 2008 (when values were down -6.4% in response to the Global Financial Crisis and successive interest rate rises).

Despite the overall downwards trend, which was felt most strongly in Sydney and Melbourne, housing values generally remain well above pre-COVID levels. Values across Australia’s combined regional areas were roughly unchanged over the year (+0.1%).

“Melbourne is the only capital city where the current downwards trend is getting close to wiping out the entirety of COVID gains, with dwelling values only 1.5% above March 2020 levels,” CoreLogic’s research director Tim Lawless.

City Home Values %
Change 2021 to 2022
Sydney  -12.10%
Melbourne  -8.10%
Brisbane  -1.10%
Adelaide ▲ 10.10%
Canberra ▼ -3.30%
Hobart ▼ -6.90%
Perth  3.60%
Darwin ▲ 4.30%
* Monthly Home Values figures as of 31 December, 2022

Predictions for 2023

Unfortunately, the pain of rising mortgage repayments isn’t over yet.

According to economists, we can expect more interest rate increases after new data showed that inflation has climbed back up to a 30-year high of 7.3%.

The monthly consumer price index fell to 6.9% in October, but it looks like the decrease was only temporary. We’ll know more about where inflation is headed when the ABS releases its quarterly CPI data for the December quarter on January 25.

The RBA is expected to raise the official cash rate by a further 25 basis points when its board meets on February 7.

With more interest rate increases expected to further reduce borrowing capacity, property market conditions are likely to remain soft over the coming months. However, once the effects of higher interest rates are felt across the wider economy and inflation is brought under control, house values are expected to stabilise.

If you’re thinking of buying a property, make sure to get pre-approval from us first. That way, you’ll be able to move quickly once you find the perfect one.

The Broad Finance team is here to help

If you want to achieve your 2023 property goals, reach out to us to discuss your financing options. We’ll be more than happy to help you find the right home loan to buy your first home or an investment property. You might also want to refinance to a home loan that better meets your needs. Whatever you need, don’t hesitate to contact us today.

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