4 ways real estate will evolve in 2023
An Australian network predicted changes in the property market over the next 12 months.
The LJ Hooker Trending Report 2023 has identified four major trends that will play out over the coming year, driven by a move into the next phase of the real estate market cycle.
The forecast follows two years of transition for property markets across Australia across a wide range of conditions, acknowledged LJ Hooker, Head of Research, Mathew Tiller.
And with the bite of affordability and rising interest rates, the behavior of homeowners, first-time buyers, investors and renters continues to change.
So what can the industry expect over the next 12 months?
Trend #1: Tenants to buy and investors to return in a tight rental market
According to the network, rental markets will remain tight in 2023, thanks to the arrival of more international workers and students, while supply remains stable.
While rents are expected to continue to climb, at a time when sales prices are falling, LJ Hooker predicted that tenants who had planned to buy a home will move forward with their buying decisions.
“Higher days on the market and seller discounts will make it easier to transition from renter to owner over the coming year,” commented network research manager Mathew Tiller.
The potential for higher rental yields (and therefore yields) will also have the effect of attracting more investors to the market, also thanks to lower selling prices.
“The combination of these factors, along with the positive outlook for rental markets over the medium term, will inevitably see investors return to buy more properties in 2023,” Mr Tiller said.
Trend #2: New and Renovated Homes Will Remain Popular
As construction costs continue to rise with no relief in sight, homeowners and potential buyers will begin to think twice about embarking on their own home improvement projects.
Not only are the costs becoming more and more burdensome, but the lack of available tradespeople to undertake work or of builders to build a house can add unnecessary stress, time and cost to projects.
“Buyers are expected to seek out and prefer newly remodeled or newly built homes instead of undertaking a project themselves on an older existing home or purchasing vacant land,” the report said.
Trend #3: Demographic shifts will drive the market
The closure of borders (both national and international) for an extended period throughout the COVID-19 pandemic has had a huge impact on migration patterns since 2020.
Now, with regional migration beginning to take hold and borders reopening to international visitors, new residents, workers and students, LJ Hooker expects the migration trend to have a “significant” influence on markets. of the country’s housing over the next 12 months.
According to the report, “this will initially have the most impact on the already tight rental markets across the country, as newcomers to the country tend to rent first, move here, then buy property. “.
With higher tenant demand – and the ongoing lack of new inventory already mentioned – the network expects rents to continue to grow “at double-digit rates in some of our tightest regional and capital markets over the next coming year”.
According to Mr. Tiller, “whether it is people seeking more affordable housing options outside of our capitals, moving between capitals for work opportunities or to a smaller regional community to get away from the turmoil, this will have a major impact on the market”.
Trend #4: Homeowners seek advice as they watch a market rally
With many markets across the country stalled this spring, the network expects no improvement until late 2022.
But, even so, LJ Hooker acknowledged that the profession remains busy performing home appraisals and advising homeowners in their respective areas on local market conditions.
The group expects these same owners to use the rest of the year to gather information on their performance in the local market and prepare their homes for listing in the first half of 2023.
According to Mr Tiller, the owners “took a wait-and-see approach” to selling.
“So we have identified a new trend, which is expected to continue into 2023, where people are more keen to understand what is happening in their local market. It also means their property is valued more regularly as they carefully monitor signs of the next phase of the market cycle,” he said.