6 key real estate trends investors must watch out for in 2023

“It’s one that’s left experts scratching their heads since no one really understands what’s going on!” she remarked. 

Further commenting on the year that was, she noted that 2022 had become a “good one for buyers” — if aspiring home owners can locate a suitable property to purchase. 

“It’s a strange juxtaposition — usually low stock and higher demand mean higher prices, but property prices have been on a steady decline all year,” Ms Jarrett-Dalton noted. 

While data may indicate that the Australian property market could be near the bottom of the downturn, the expert said only time and potential changes in the lending climate would tell.

Notably, the Reserve Bank of Australia’s (RBA) monetary policy tightening, which was kicked off in May 2022 to fight surging inflation, has changed the finance game in the market for property buyers. 

Following eight consecutive interest rate rises, the country’s cash rate stood at 3.10 per cent at the end of 2022 — its highest level in a decade — which significantly reduced buyers’ borrowing capacity. 

Many current home owners may be looking for a new property with the start of the new year, and Ms Jarrett-Dalton said they could be out of luck. 

“There just aren’t that many nice properties available to buy at the moment, so many potential sellers and buyers are holding off until they can find what they want,” she opined. 

Going forward, Ms Jarrett-Dalton enumerated the six trends and investment opportunities that investors should look out for in 2023. 

1. There are still investment opportunities in the market 

If you’re looking to invest in property, Ms Jarrett-Dalton stated that “2023 could be your year”.

“The rental crisis has created a need for investors, so the time to think about buying an investment property is both now and next year, while we’re still experiencing this dip,” she advised. 

The expert noted that people are also starting to think about the future when it comes to their investments. “Buying the homes now into which they will retire has become a trend,” she said. 

2. First Home Buyers are still significant market players 

Ms Jarrett-Dalton said that first home buyers continue to make up a significant portion of those who are looking to make a move in the property market. 

“Some may be more cautious about entering the market right now because of rising interest rates, but there are still many out there buying that typical starter home — three beds, one bath, etc. to get their foot on the property ladder,” she commented. 

While the bank of mum and dad is still a consistent factor when it comes to securing the first deposit for FHBs, the expert noted a “new twist” to this trend. 

“Early inheritance is on the rise, allowing first-timers the opportunity to buy their first home or investment property without the added stress of paying back mum and dad as well as their brand-new mortgage,” she stated. 

3. Available land for building continues to be scarce 

With land becoming a scarce commodity in the Land Down Under, there are many people concerned about building and causing them to hold off on pulling the trigger to get things built, according to Ms Jarrett-Dalton.

She noted that the lack of registered land is causing construction to stall. “They seem to be waiting for the prices to go down, which may not be wise,” she stated. 

Supply chain and other cost factors are driving the price up, which is being passed onto the consumer. With these factors in mind, she stated that holding off on building in the hopes of a price drop could have you “holding your breath for a long time”. 

4. Rising prices of lifestyle locations to slow tree/sea changing trends 

Ms Jarrett-Dalton acknowledged that in recent years, people typically opted for a sea or tree change to get away from the higher urban and suburban prices of the big smoke. 

“Other lifestyle considerations also saw droves of people of all ages moving out to the regions, particularly in the last couple of years,” she stated. 

But she said that rising prices in waterfront areas — particularly beachside locations — have made fewer people willing to take the plunge. 

She also pointed out the resurgence of multigenerational living as more people deal with the stress and pressure of increased interest rates and higher mortgages despite not being a “popular choice”.

“Similarly, while multigenerational living has been both a cultural and practical necessity for many over the years, it’s a trend that we are watching right now. Just two years ago, it was estimated that about 20 per cent of Australian households were multigenerational,” she remarked. 

5. High cost of living, interest rates to impact consumer behaviour

The rise in the cost of living will see people being more conservative when it comes to budget, but Ms Jarrett-Dalton said this isn’t to say that budget will trump affordability — rather that potential buyers will be pickier to ensure comfort within their budgets.

“Gone are the days when people would shrug off an extra $10,000 or spend that extra $20,000 to get the home they’ve been dreaming of. Now, buyers will pinch the pennies until they cry for mercy to make sure they don’t go over that ever-present loom of the interest rate rises squeezing the budget,” she forecast. 

She also expects some reversals in interest rates toward the end of 2023. “Mortgage holders are feeling the stress of rate rises right now, but they could find themselves hurting more if they sell their homes further down the line,” she said. 

The rising interest rates and cost of living will also see a rise in refinancing and renegotiation, with many home owners getting “smarter and more proactive” when it comes to their mortgages, according to the expert.

“However, some people may not realise that they are unlikely to be able to refinance or renegotiate if the value of the property has changed, which could cause a lot of stress and frustration,” she stated. 

6. “Homes of the Future” becoming closer to reality 

Ms Jarrett-Dalton said the onset of the pandemic saw a massive change in what people need from their homes. 

“Most notably, home office spaces became a necessity — one that many are reluctant to give up, even now. Where people would once buy an entertainer’s paradise, most now want the working-from-home haven,” she said. 

She also revealed that many home owners are also thinking of more futuristic-style houses with consideration for smart homes (or the ability to adapt to one) and space to charge electric cars.

“With the rising cost of fuel and electricity, it’s no surprise that people are being mindful of the ways they can move into or create the house of the future,” she commented. 

While a high-tech home at par with that seen in The Jetsons is not here yet, the expert noted that more and more home owners are starting to head in that direction. 

“The last two years have left people feeling more uncertain and fearful than before, but people are also more aware of what they want and are savvier than before, which will make 2023 an interesting one to watch,” she concluded.