From rising interest rates to slumping vacancy rates, rental pain, cost-of-living pressures, and investors fleeing the market, EOFY2023 had it all and more.

While the property market has seen some good recovery from the pandemic, there has also been plenty of residual ups and downs from COVID.

Let's take a look at the EOFY that was.

EOFY23: real estate standouts

1. Interest rate rises

Winning first prize for this past year's most brutal strike on the property market is the Reserve Bank of Australia (RBA)'s 10 (almost) consecutive cash rate rises.

Coming after rate rises in May and June in 2022, the 0.1% rates experienced between November 2020 and April 2022, and just one break in these increases in April 2023, it's little wonder homeowners across the country are struggling with mortgage repayments.

From the almost 18-month free spree of 0.1% rates during the pandemic - the lowest rates Australia has ever seen - the RBA has now bumped up rates to 4.1%.

This is the highest level in 11 years and the 12th such lift in 14 months - and more such bumps are expected, in the short-term at least.

2. Cost-of-living pressures

Another big bane of the FY2023 period has been the extraordinary price rise in groceries and utility bills, let alone petrol.

According to the Australian Bureau of Statistics (ABS), the monthly Consumer Price Index (CPI) indicator in the year to April 2023 hiked to 6.8%.

This figure is up from a 6.3% annual rise recorded in March 2023 - but at least it was below the 8.4% annual point in December 2022. 

Yet perhaps even more disturbing is that the most significant contributors to the April annual increase are:

• housing (8.9%);
• food and non-alcoholic beverages (7.9%); and
• transport - including petrol (7.1%)

In other words, even the most basic day-to-day needs of an average person are now suffering the most of any other detail in life.

And if you're thinking, "I'll just live on bread and milk, then, not steak", think again.

The ABS CPI report noted that prices for bread and dairy products increased the most of any other food and beverage (11.4% and 14.5% respectively).

Fruit and vegetables increased 3.5% and even non-alcoholic drinks still spiked 9.7% while alcohol was up 5.1%.

And it's probably best not to even think of electricity and gas bills with electricity in Queensland, New South Wales, South Australia, and Victoria expected to jump up by 20%-25% in FY24.

While gas bills don't look set to increase quite this much, residents are still facing sharp increases.

3. Rental pain and vacancy rate slumps

We've all heard about "soaring" rents and the minimum number of houses available to potential tenants - and this trend has only tightened further since it first began in late 2021 during the pandemic.

There are multiple reasons for these changes from too few residential properties overall across the country to a severe shortage of social housing.

The return of international students to Australia this year also isn't helping the fight to find a rental.

According to an ABS report in April 2023, as of February 2023, the median weekly rent amount was highest in the ACT ($560) and the lowest in South Australia at $380 per week.

And SQM Research data shows that as of June, vacancy rates in every capital city in the country are at 2% or below.

4. Fewer investors = less rentals

There's little doubt that plenty of investors - especially the traditional Mum and Dad type - are fleeing the market.

Again, there are multiple reasons for this, including low consumer confidence in the property market overall while - as we discussed recently - tenants now enjoy more rights than landlords in how they treat their property.

We've read a few articles on this point but all basically say the same: property investors are lying low - for now - and especially as interest rates continue to rise.

As a result, tenants' lives will continue to be tough, at least for awhile.

How can I prepare for FY24?

• Expect further interest rate rises - at least in the short term
• Expect house-hunting to take much longer
• Expect the home you buy/rent to not be the Dream Home in a dream area
• Cut back on luxuries (ie manicures, Netflix and takeaway food) and put it towards an extra "buffer" rent or mortgage repayment zone
• Look backwards: our parents and grandparents dealt with 17% interest rates in 1989, a global share market crash in 1987, and a national recession we "had to have" in 1990
• ... and look ahead: homebuyers, today's struggles will often mean tomorrow's ease. Just ask your parents and grandparents. Most often, it all comes out in the wash - if you're smart and do things as right as you can during the struggles.

Most of all, be kind to yourself.

Whether you're a homeowner or renter, paying for a roof over your hard, plus food and water, is hard and it always has been.

And, it can definitely be humiliating asking for help.

But lenders at least are being asked for such mortgage help more and more these days and will appreciate being asked now about such struggles, rather than down the line.

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