The revised prediction from the RBA about a larger-than-anticipated 20% fall in property prices (with Sydney leading the pack) has fuelled further speculation in the media about what the market will look like next year. So, what are property experts predicting for 2023?

The latest news from the RBA has delivered another punch to consumer confidence 

As someone who experienced interest rates climb to a staggering 13% in the late '80s in the UK, I know something about mortgage stress, and I know that Philip Lowe’s change of outlook will give certain property owners some additional sleepless nights, not to mention the impact on consumer confidence. 

Worse, his latest prediction will undoubtedly fuel a lot more ignorant guesswork from the media. 

But putting his forecast to one side, how likely is this scary scenario to eventuate when most property experts appear more optimistic about next year? After all, it wouldn’t be the first time the RBA has been wrong.

Fortunately, most property experts feel more confident

After several years of unprecedented growth in most of Australia, no one would argue the need for a housing market correction to lower inflation and high living costs, which the recent hikes in interest rates should facilitate. Consumer confidence has dipped - evidenced by the lower number of sales this Spring, (and even more reason to check out our top tips for selling) - because some buyers and sellers are so frozen by the fear of FOMO, mortgage stress or selling at a loss.

But the news isn't all bad. Canstar predicts that "Based on the latest predictions, the cash rate in Australia is expected to climb to a peak of up to 3.35%," in 2022, which is some reassurance for those who have already purchased. So, instead of panicking, our advice is to take a deep breath and try to remember that however challenging the current market conditions, there are always people who must buy or sell because of personal circumstances like migration, death, employment, divorce, or simply because they need to up or downsize.

Furthermore, if you intend to stay in the market, remember that losses are relative and there are also ways to reduce your exposure, save money and achieve a quicker, less stressful outcome by selling or buying off-market, an area in which we can help.

Losses are relative

The number of sold properties is down this spring, but no buyer or seller can hold out indefinitely. As reported in The Property Tribune: “At some point, you just have to choose to get into the market.”

Furthermore, with the opening of our borders, the return of overseas migration, the shortage of good property, and the limitations imposed by our climate and landscape, demand should always remain relatively strong in Australia.

So, can anyone accurately predict what will happen in 2023?

Without a crystal ball, not really. But there are several property aficionados whose job it is to keep their ears to the ground, and some of them are prepared to take a stab at an answer. 

Here’s what property experts are predicting for 2023:

• Philip Lowe, the Governor of the RBA, was confident the market wouldn’t fall beyond “a cumulative 10%” only a few weeks ago. In fact, he went so far as to justify the drop with a reminder that, “Even if they did … they’re still up 15 per cent over three years." This is why yesterday’s news of a higher figure will have ruffled the feathers of many sellers. For the record, however, the bank's documents show that they anticipate a national fall of around 11% by the middle of next year before stabilising again.

• Michael Yardney, from Property Update, doesn’t think we are heading for a crash because “Interest rates are only one of the many factors that affect home prices.” He acknowledges that “Buyers need more money to buy a property…. but they aren’t able to borrow as much as they could when interest rates were lower.” However, with low unemployment and interest rates unlikely to go much higher, he predicts nothing more than the “correction” we have already seen in Melbourne and Sydney. He believes a crash is highly unlikely, and because mortgage lenders factor in a buffer for rate rises, he is confident most property owners will be able to service their loans.

• Core Logic predicts the market should stabilise once interest rates stabilise and that the correction will bottom out in early 2023 and then start to recover. Tim Lawless, their national research director, cited the current auction clearance rates as a sign that the market is already showing signs of recovery. He too admits that “There’s still a lot of uncertainty,” but, “despite the -10.1% decline so far, Sydney home values still have a way to go before wiping out the capital gains accrued over the recent growth cycle.”

• The four major Aussie banks have predicted a 10-18% drop overall, conclusive proof that the correction across the nation will last for a while, although many experts predict another lift in values in the capital cities in 2024.

Investing is a long game

Obviously, the RBA's latest prediction is scary for those who recently bought into the market and took out large mortgages, but anyone who has done their homework knows that real estate is a long game. And according to Yardney, even though investor loan approvals have fallen a little recently, there were still $9.3 billion of new loans approved last month, which hardly sounds like a major cause for alarm.

In the short term, buyers can enjoy being more selective about where and what they buy, and sellers shouldn’t panic if they have a buffer in terms of their capital gains and own properties in popular neighbourhoods with good transport, amenities, and schools.

There's an element of risk with any investment

And real estate is no different. But as my father says, if you invest in bricks and mortar you will always have a roof over your head. So, if you are looking for a quick, cost-effective way to sell your property in a challenging market, check out the exclusive services and benefits we offer our customers. Sellers can learn about the fantastic benefits of selling off-market that come with our Seller Assist service here, and buyers get free access to our latest off-market listings by signing up with us today or by downloading our app.