Australian Housing Market: 2023 Property Prices Forecast

What will drive the Australian housing market?

Wondering what the future holds for the Australian housing market? Checkout our 2023 property prices forecast and discover the key factors driving the market.

If you’re considering buying or selling property in Australia, it’s important to stay up-to-date on the latest market trends and forecasts. Our 2023 property prices forecast takes a closer look at the factors driving the market, including interest rates, population growth, and economic conditions. Find out what the future may hold for the Australian housing market.

Population Growth and Migration

One of key factors that will drive the Australian housing market is population growth and migration. As more people move to Australia, the demand for housing increases, this will have an impact to drive up property prices. Additionally, population growth can lead to the development of new housing projects and infrastructure, which can further stimulate the housing market.

The population growth projection is one person every 55 seconds according to the ABS Population clock. This equates to a population increase of 573380 people per year or 1570 people per day. However, the number of migrants calling Australia home will be even higher, based on the population clock of 717000 people per year or 1965 per day. Queensland had the highest growth rate of 2.2% followed by Western Australian with 1.8% over the year ending 30 September 2022.

It’s important to consider population trends and migration patterns as a property prices forecast when making decisions about buying or selling property in Australia.

Housing Supply and Demand

The balance between housing supply and demand is another driver of the Australian housing market. When there is a shortage of housing, prices tend to rise as buyers compete for limited properties. On the other hand, when there is an oversupply of housing, prices may decrease as sellers compete for buyers.

The current low rental vacancy which is well below one percent and the low supply of new housing will be another driver of house prices for the years to come in Australia.

Economic Growth and Employment Rates

Economic growth and employment rates are other key factors that can drive the Australian housing market. When the economy is strong and employment rates are high, people have more money to spend on housing and are more likely to invest in property. On the other hand, when the economy is weak and unemployment rates are high, people may be more hesitant to invest in property, which can lead to a slowdown in the housing market.

Economic growth in Australia is forecast to slow this year as rising interest rates, the higher cost of living and declining real wealth weigh on growth. However the economy grew 0.5 per cent during the December quarter 2022, and 2.7 per cent compared to last year as reported by ABS in the beginning of March.

The unemployment rate remained at historical low of 3.5%. And, the Australian Government is projecting an increase in employment across all industries to November 2026. This projection and the low unemployment rate are also property prices forecast indicators suggesting that property prices are likely to increase again in the near future.

Interest Rates and Mortgage Availability

Interest rates and mortgage availability are also important factors that can drive the Australian housing market. When interest rates are low, it becomes easier for people to obtain mortgages and purchase homes, which can increase demand and drive up property prices. On the other hand, when interest rates are high, it can be more difficult for people to obtain mortgages, which can decrease demand and lead to lower property prices. It’s important to keep an eye on interest rates and mortgage availability when making decisions about buying or selling property in Australia.

RBA’s unseen interest rate hike since May 2022 will eventually come to an halt. They have this one lever of power to control the Australian money market. Are they going to push the lever too high and break something too? There are indications that the sudden collapse of the Silicon Valley Bank and Credit Suisse was a direct result of the aggressive interest raise of Reserve Banks in the US and other countries. The banking sector trouble and the low consumer sentiment is a clear warning sign for the RBA to not push the lever any further.
In this article we discussed how factors such as population growth, migration patterns, economic conditions and interest rates can affect housing supply and demand. It’s important to keep an eye on these factors when considering the property price forecast of the housing market.