How The Australian Housing Market Is Shaping Up To Be Towards 2023
Many news agencies anticipate a shift in the Australian Housing Market by 2023.
The Reserve Bank of Australia (RBA) has been increasing the interest rates gradually over the past couple of months. They could continue doing so well into the following year, leading to the following scenarios:
- Interest rates increase. Mortgage holders will receive the brunt of the increase.
- Mortgage repayments will soar by a significant percentage.
Analysts expect a tight market for buyers and sellers next year. However, by 2024 the situation hopefully eases. According to ratecity.com.au, property prices are tipped to lift in capital cities in 2024 but will be substantially lower in 2023 than they are today.
What Does This Mean For Home Buyers and Sellers?
First, we should keep in mind that sellers are also homebuyers. If a seller decides to liquidate their asset, they would still need a place to live. Considering this, let’s break down the implications that it could mean for both:
- Homebuyers who bought their properties last year will probably owe the bank more than what their home is worth by the end of the following year.
- If you plan on buying a property soon, you will pay significantly higher interest rates than today.
- Property owners who made low deposit payments might find it difficult to refinance in the coming months. This might put them into a situation called “mortgage prison.” When homeowners are trapped in mortgage prisons, they are stuck in one mortgage, preventing them from getting another.
- First-time home buyers who have availed of the government’s low-deposit scheme will also be affected.
Are We in a Housing Market Crash?
Considering the figures ahead of us and their looming implications, a question might cross your mind: “Are we in a housing market crash?” We are in no position to predict or forecast what could happen. However, there are some considerations outside of the housing market worth looking into:
- The possibility of housing demand is just around the corner. Driven by international immigration, there might be an increase in housing demand to accommodate population growth.
- As of writing, the employment level in Australia is thriving. Jobs are available to anyone who is looking for them.
- Our banking system has established criteria for lending, thus noting low non-performing loans.
- The government is continuously encouraging and formulating ways to assist first-time home buyers.
What Should We Do?
While the situation appears dire, we can still resort to measures that will help weather the threats. Here are two things home buyers and sellers can do:
If you can afford it, consider advance payments.
Interest is calculated on the remaining balance you have to pay. By making extra payments, your balance and interest are recalculated. The faster we pay off our home loans, the easier it will be for us to focus our resources on other things we want to buy and experience.
Carefully consider the right suburb.
We should have learned during the pandemic that the suburb we’re in plays a crucial role in our holistic health. If you are to pay a premium on housing, make sure that it allows you to work, live and play with less stress and hassle as much as possible.
The Takeaway: Focus On The Things You Can Control
While there is no certainty as to what will happen in the coming months, one can always be prepared by focusing on the things one can control. In this case, be prepared by keeping your finances in check. Prioritize the things you hold important. It also pays to be updated with the latest news and possible government aid and efforts.