If you’ve made a move this year (or are considering one in the months to come), you may have noticed a few things about the Sydney market.
Lots of talk about falling house prices, for one, teamed with significantly low rental rental vacancies and resulting competitive rental prices.
Add to that tightened lending caps from banks due to rising interest rates, and it’s a pretty good recipe for mounting hardship on housing affordability – whether you’re renting or buying right now.
While more expensive Sydney suburbs – ‘million-dollar markets’ – typically show the greater declines, our local South West Sydney market hasn’t gone unscathed, with interest rates squeezing many buyers into smaller dwellings or more affordable neighbouring suburbs.
So in 2023, what’s to come? Should you be buying, selling – or staying put?
In the 2023 Boom and Bust Report by Louis Christopher, property analyst and founder of SQM research, Christopher predicts four scenarios for buyers and sellers to keep a lookout on in 2023 – one of which is likely to play out.
1. A ‘Rates on Hold’ scenario – ideal.
Interest rates peak at no more than 4%. A cash rate of 4% will see much more ‘forced selling’, Sydney-wide.
2. A ‘Goldilocks’ scenario – also ideal.
A similar scenario to the first, only rate cuts occur in the second half of the year.
3. A ‘False Down’ scenario – a hard landing.
RBA pauses the cash rate between 3.1 – 3.8%, but underestimates accelerating inflation, and then aggressively lifts interest rates in later 2023.
4. A ‘Recessionary Inflation’ scenario – also unideal.
RBA doesn’t put rates on pause, and keeps lifting them instead, leading to a steep recession in the later part of 2023.
If there’s one thing to bear in mind, it’s that all four scenarios above are in the hands of the RBA. There’s a number of other variables, which if combined with any, could have a positive impact on the property market and economy according to Christopher. These include:
- First-time buyer concessions, including the option of annual land tax (instead of stamp duty)
- Continued surges in demand for property from borders reopening
- Growing rental market demand in Sydney, causing more investor-buyers
- Increased employment rates
While next year is destined to be one of continued price instability, our advice to homeowners (and seekers) echoes that of Christopher’s report – now is the time to be conservative with your money.
South West Sydney homeowners are likely to feel the real impact of rising interest rates into the new year, especially those who’ve felt the safety net of mortgage interest rates fixed around 2% – a number of which will be expiring in 2023-2024.
So if you’re looking to buy (or you’re selling to upgrade), do some financial ‘housekeeping’ beforehand. Pay off any smaller and medium debts if possible, and minimise all unnecessary expenses. And of course, get in contact with a trusted lender to borrow within your means, who may recommend being conservative by borrowing against a higher serviceability rate.
For more details and market predictions for your suburb, Louis Christopher’s full Boom and Bust Report 2023 can be purchased at this link – or contact our team today.
Prudential Real Estate Campbelltown | (02) 4628 0033 | campbelltown@prudential.com.au
Prudential Real Estate Liverpool | (02) 9822 5999 | liverpool@prudential.com.au
Prudential Real Estate Macquarie Fields | (02) 9605 5333 | macquariefields@prudential.com.au
Prudential Real Estate Narellan | (02) 4624 4400 | narellan@prudential.com.au
