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What Can We Expect for the Australian Property Market in 2023?

John Tran
January 23, 2023
What Can We Expect for the Australian Property Market in 2023?

By the end of 2022, mortgage rates began to increase at an accelerated rate, which caused significant disruption and uncertainty. This dramatic shift affected both buyers and sellers, making it much harder for first-time homebuyers to enter the market and putting considerable strain on existing homeowners trying to refinance their mortgages.

The increase in mortgage rates was a major contributing factor to the downturn of the property market in 2022. But what can we expect this year? Here's a look at some of the most recent predictions for the Australian property market in 2023.

Will Mortgage Rates Rise to 3-4%?

Mortgage rates are a significant factor when it comes to deciding whether or not to invest in real estate. But as we enter 2023, many wonders if mortgage rates will rise again.

According to Powell, "Rate hikes are expected, but they won't be as dramatic as those seen in 2022. This is good news for potential homebuyers anticipating entering the property market."

Powell also explains that the recent rate hikes have left many homeowners in a difficult spot. He says some need help servicing their mortgage, while others are forced to reduce spending in other areas. However, buyers today should consider how long they plan on staying in their new home and factor in potential future rate changes when making this decision.

By being mindful of their financing capacity and planning for rate hikes, Powell believes buyers can save themselves from financial distress in the future.

Interest rates are expected to remain low, making it a good time to buy property

If the RBA decides to leave rates at 3.1% or lower in 2023, House prices could remain relatively stable despite some minor softening. However, if the cash rate is increased a more significant price adjustment could be seen within the housing market.

In any case, while making decisions regarding their assets, property owners should be ready for any market changes and take any potential hazards into account. It's also important to keep in mind that although the RBA has a big impact on housing prices, other elements like consumer confidence and regional economic conditions also matter.

Associate Governor at the RBA Christopher Kent is also confident that the RBA would stop raising rates before the cash rate reaches 4% and does not believe that rates will get to that level given that prices have stabilised over the course of the year.

The number of properties available for sale is expected to increase

The best time to buy might be right now if you've had your eye on the house for a long but were prevented by the high mortgage rates.

With a median home price of more than $1 million, Sydney's real estate market continues to be among the most expensive in Australia. Yet if you're seeking for slightly lower home prices, Perth is an option to take into account since according to SQM data, as of January 3, 2023, the average asking price for real estate in Perth was slightly under $1 million. Although it's still a considerable sum of money, the price is about 25% lower than what you'd have to spend for the Sydney house.

Melbourne is another popular destination for property investors, with a booming technology and creative sector driving rapid economic growth. To top it off the State Government offers more incentives for Victorians to buy in some of these central postcodes.

First-home buyers will continue to be active in the market

First-home buyers are a vital part of the housing market, which will likely continue in 2023. As more individuals enter the real estate market, first-time buyers may be encouraged to purchase their own homes as prices are expected to remain accessible for entry-level properties. Additionally, government programs aimed at helping first-time buyers with down payments and closing costs may stimulate the market further.

With demand for starter homes projected to remain high, buyers should be prepared to act quickly to secure their desired property. Financial advisors recommend that potential buyers assess their needs and budget carefully before committing to avoid any problems down the line. It is also crucial for first-time buyers to understand any potential risks associated with buying a home and take steps to protect their interests.

Overall, 2023 will be an exciting year for first-time buyers looking to enter the housing market, as numerous opportunities are available. With careful planning and preparation, these individuals can become proud homeowners in no time.

Investors are expected to return to the market as confidence increases

Christopher believes the current incentives for first-home buyers will be crucial in encouraging more of them to enter the market and these include grants, tax breaks and stamp duty concessions.

For instance, eligibility for the First Home Loan Deposit Scheme has been extended until June 30, 2023. This scheme allows eligible first-home buyers to purchase a property with a deposit of as little as 5% (subject to approval). Christopher adds that stabilising the cash rate at 4% could also increase first-home buyers' activity. Once interest rates become certain, more people will be confident to make a purchasing decision.

He also believes that first-home buyers should return to the market sooner than investors. "I think once we see some certainty surrounding interest rates as mentioned and provided the cash rate stabilises at the 4% mark, then we will see more first-time buyers in the marketplace in 2023 and then followed by investors," Christopher says. 

With these incentives and a stable cash rate likely over the next couple of years, Christopher believes that the housing is in a much better position to attract more first-home buyers. "It's looking like a great time for first-time buyers and investors alike," he says.


All in all, 2023 is shaping up to be a good year for the property market. Prices are expected to be more stable, more properties will be available for sale, and interest rates are expected to stay low. First-home buyers and investors alike should take advantage of these conditions and enter the market while they can.

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