AUSSIE home prices tipped to rise in 2023

PHOTO: Sydney Harbour Bridge, Sydney Australia

According to realestate.com.au Melbourne’s median house price could gain up to $45,500 next year in a market up tick that could have tenants needing to find an extra $60 per week.

Despite seven consecutive hikes this year to a 2.85 per cent official cash rate, SQM Research is expecting it will not get higher than 4 per cent in 2023.

Managing director of SQM and Housing Boom and Bust Report author Louis Christopher said an economic slowdown was likely, but a hard landing should be avoided.

“If the target rate stays below 4 per cent, then it is unlikely we will have a flood of forced sales in the housing market,” Mr Christopher said.

Profile YOU! – FOR 12 MONTHS | ONLY $499 plus GST

But the rental crisis is likely to get worse, with the latest Rental Affordability Index (RAI) revealing affordable rentals in regional Victoria at record lows.

SGS Economics and Planning partner Ellen Witte noted rents were now at equal or higher levels than before the pandemic.

“The pandemic also saw the existing rental crisis spread to the regions, when many households left capital cities,” Ms Witte said.

286 Warrigal Rd, Oakleigh South - for herald sun real estate

This three-bedroom house with a pool in Oakleigh South sold more than $300k above its reserve on the weekend.

“More and more regional households are struggling to pay their rent and key workers are unable to access housing.”

In Melbourne, that report noted increased demand for rental accommodation from students, workers and tourists led to the decline in affordability this year.

SQM Research has also forecasted rent rises of up to 13 per cent in 2023, which would drive Melbourne’s typical $465 weekly house rent to levels as high as $525 per week.

New Zealand central bank sets NZ up for a 2023 RECESSION | WATCH

PropTrack director of economic research Cameron Kusher said he expected strong rental growth in the next 12 months, but did not expect the cash rate to reach 4 per cent.

“I’m fully expecting another interest rate hike in two weeks, and expecting at least one, if not two hikes early next year,” Mr Kusher said.

Cameron Kusher from REA Group expects to see strong rental growth in the next four months.

“Then we will have a period of stability, which will give buyers a bit more confidence.”

Although SQM has forecasted a market recovery in 2023, Mr Kusher said he would be surprised if house prices rose as much as 5 per cent — SQM’s “best case” scenario if interest rates were held at current levels.

NEW Aussie luxury real estate series

“Prices were only down 3.5 per cent in October from their peak in March, and we have previously forecast Melbourne prices to fall as much as 18 per cent from this peak,” he said.

“I expect that we will continue to see prices to fall, mainly because interest rates have risen very quickly and much sooner than people expected, so consumer confidence is at recessionary levels.”

Mr Kusher expected prices to continue to fall in 2023 before picking back up again later in the year or in early 2024.