2023 is well underway along with plenty of negative commentary and predictions about the future of the property market. But is it really something to be concerned about? Will the property market crash this year?
Many home sellers who have been contemplating making a move, ask us whether they should hold off and wait, or jump right in and ride the rest of the wave? We look at each of these scenarios below but firstly take a look at the reality of the current picture for the Sydney property markets.
During 2022, eight successive rate rises aimed at offsetting high inflation caused a major panic across the property market. Many sellers and buyers chose to sit on the sidelines to watch and wait, resulting in a decline in auction clearance rates. Following a transition or adjustment period over the Winter months, we then experienced a shortage of properties for sale during Spring which is typically the busiest time.
This shortage in supply fortunately kept the market afloat during the lead up to Christmas, and values held reasonably firm for good quality and well located properties. Overall Sydney prices fell approx. 7% this year since March, escalating over the Winter months and slowing down toward the year’s end.
This year we expect to see home sellers relax a little as rate rises begin to slow, and more properties start to come on the market. The longer term outlook for 2023 really depends on how many more rises are likely. However as inflation begins to come under control, rates are likely to slow and a pause is predicted within the first half of this year.
Once this pause is announced, the effect will take some time to impact the property market so we could still see a further decline in prices until this occurs. The recent introduction of a stamp duty alternative for first home buyers has already begun to fuel the lower end of the market which will over time have an impact on higher priced properties. Following the rate pause announcement, property prices will likely stabilise for a period before we experience another upward trend. This could take a number of years overall.
If you decide to hold off and wait, then it will likely be another few years before we see any real uplift in prices. However with a pre-pandemic average annual growth rate of approx 7% for houses, waiting a few years may only bring you back to today’s levels. One thing is certain, we won’t see anywhere near the gains we’ve experienced over the last few years (which averaged around 15% pa).
Since prices still have some way to go before hitting the bottom of the market, selling sooner rather than later might be a better option if you’re looking to downsize or upgrade. Selling now while stock levels are still in relatively short supply, will allow you to buy later in the year when prices are at their lowest and more properties are available. 2023 is predicted to be the year where we see an increase in mortgage distress as two thirds of those loans at record low rates will come off their fixed rate periods. This creates further opportunities to buy, albeit a very sad situation for many families who overpaid during the pandemic.
If you’re thinking of upsizing, it’s often the case that the upper end of the market experiences larger price declines. This means the money you save on your purchase will more than out weigh any losses you may experience on your sale.
If you are thinking of selling and not sure whether the timing is right for you, feel free to book in a call with us. As your Vendor Advocate we provide advice on how to best prepare your home for sale, which agent will achieve the highest price and then work together with the agent to ensure your interests are protected and you are not pressured by the agent into underselling.
Our help costs you nothing extra, so you really have nothing to lose!