The property market in AUSTRALIA got off to a fantastic start in 2022, with record home values following a very strong run of price increases.
But the tide changed after April of this year. It was obvious that the boom was finished, and a correction began. However, there hasn’t only been negative news; the outlook for 2023 is already looking better, states Tyron Hyde, Washington Brown.
What elements have changed the real estate market?
The market has had a significant year, with various variables influencing it.
We had the federal election and the Anthony Albanese-led ALP government’s policies, which included the Help to Buy shared equity programme.
Additionally, state governments have proposed and carried out a variety of measures.
After a backlash, the Queensland Government eventually abandoned its plans to modify land tax, which would have required owners with properties in various states to pay land tax in Queensland at a rate based on all of their holdings, not just those located in Queensland.
However, starting on July 1, 2023, the government in Victoria will enact a Windfall Gains Tax that will apply to significant windfall gains that result from decisions to rezone the land. For windfalls over $500,000, the whole value uplift will be subject to a 50% tax.
New South Wales also implemented stamp duty amendments this year, enabling first-time homebuyers to pay an annual land tax rather than a one-time stamp duty.
Due to sharp increases in labour, materials, and shipping expenses during the previous few years, many builders also experienced financial difficulties in 2022. According to the most recent CoreLogic Cordell Construction Cost Index, national residential construction costs increased by 11% in the past 12 months to September.
While all of these and other variables have affected the market, interest rate increases have by far had the most influence on the entire real estate market this year and have been the primary driver of price declines.
In May, Australia experienced its first interest rate increase in nearly 12 years. Before that, during the pandemic in November 2020, the RBA had lowered the cash rate to an emergency low of 0.1%.
The cash rate surprisingly increased by 0.25% this month from its historical low, and since then, it has increased by a total of 3%, with a rate increase every month to fight inflation.
Rising interest rates
How have costs changed this year?
Even though prices have started the year well, there were indications around the end of the previous year that price rise was already slowing and affordability was beginning to bite.
In the later half of 2022, affordability became a major concern for the market, especially from governments. While affordability is still a major problem, prices have dropped this year, which has resulted in a small improvement.
According to the most recent CoreLogic Home Value Index, there have been price reductions for seven months straight. Prices are at 7%, or $53,400, below their peak from April.
It should be emphasised, however, that the declines come after a 28.6% increase throughout the boom, according to CoreLogic, which raised the average home’s value by around $170,700.
Sydney and Melbourne have experienced the largest price drops, although these cities are seeing a slowdown in the losses. Sydney is the only city to have prices decline by more than 10%, but it also experienced growth of 27.7% during the upswing.
Interestingly, prices in Perth and Darwin haven’t dropped during the slump.
Some people have witnessed a decrease in the value of their property due to price declines this year, but others have taken advantage of the market to buy homes at deep discounts that will increase in value when the market gets up again.
Rents have increased despite lower prices.
It’s no secret that Australia’s rental market is now extremely competitive, with vacancy rates hovering around 1% or lower in most regions.
According to SQM Research, Brisbane, Perth, Adelaide, and Hobart have the lowest vacancy rates at less than 1%.
Rents have increased along with vacancy rates due to a shortage of rental supply compared to demand and an increase in nett international migration.
Brisbane has experienced the fastest rental rise for homes, with rentals increasing by 13.4% in the past year.
Sydney experienced the biggest rent increase for units (14.7%), followed by Brisbane (14.3%).
According to CoreLogic, rental growth has slowed recently, with the rate of growth falling from 3.1% in the July quarter to 2.5% in September.
Rent yields have been increasing, which is good news for investors as prices have dropped and rentals have increased.
Gross rental yields in the combined capitals increased to 3.5% in November, up from a low of 2.96% in February, according to CoreLogic data.
What can we expect in 2023?
Interest rate increases have been more restrained recently, with the last three increases totalling 0.25 per cent as inflation appears to be slowing.
Although there are several factors at play, there is some speculation that rate increases may stop in the first half of next year and that the cash rate may even decline, leading to a return to price growth. It is too soon to say if this will happen, though.
With the drop rate reducing since August, price declines seem to be slowing down. According to the most recent CoreLogic Home Value Index, prices nationwide decreased by 1% in November, the smallest monthly decline since June.
As demand continues to outnumber supply, price increases will be supported, particularly as international migration continues and even picks up.
In 2023, there will probably be more domestic buyers eager to enter the market as home affordability improves and prices have moderated, especially as worry over interest rate increases subsides.
Some indicators of housing affordability are getting easier, according to CoreLogic.
The median home values to income ratio decreased across the combined capitals, falling from 8.4 in March to 7.9 in September.
The expected time needed to accumulate a 20% deposit also decreased, falling from 11.1 in March to 10.6 in September.
According to Tim Lawless, research director at CoreLogic, lowering affordability barriers has the opposite effect of increasing serviceability costs.
The early worry about investing in an environment with increasing interest rates is potentially dissipating. Meanwhile, continually low-promoted stock prices have probably facilitated the trend towards smaller value falls.
“Regional listings are at their lowest level since 2007, while total listings in the capitals are at their lowest level for this time of the year since 2010. This is probably a major component balancing off the detrimental effects of increasing interest rates and low consumer confidence.
“However, it’s fair to argue that the housing risk is still heavily weighted to the negative as interest rates continue to rise and household balance sheets continue to deteriorate.
“There is still a chance that the rate of losses will quicken, particularly if the cycle of rate hikes continues longer than anticipated.
As the record-low fixed rate terms negotiated in 2021 expire, “next year will be a particular test of serviceability and housing market stability.”
According to Mr Lawless, a buffer against rising mortgage rates and cost of living pressures should also be provided by household savings and a history of making more than necessary mortgage repayments.
According to him, the most significant variable influencing future home market circumstances is the trajectory of interest rates.
Regarding Tyron Hyde
The CEO of Washington Brown Quantity Surveyors is Tyron Hyde. He is frequently featured in the media & invited to speak at conferences due to his reputation as one of the field’s top experts in property tax depreciation.
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I have known Charles Vincent Kauwasha for many long years now since we first met in Accident and Emergency department of Hutt Hospital Lower Hutt New Zealand, where he was an emergency nurse. I had a problem with my heart and very quickly learnt to trust him with my life! we got talking about our businesses and exchanged contact details. Charles has been a loyal friend and business contact here and on whatsapp etc ever since that time, even after he moved from New Zealand to Australia. Charles is a very honest, loyal and trustworthy person, both in business and as a friend. I highly recommend Charles as a safe person to know and do business with.
Charles has provided me with many – free but easy to use marketing tools. If you are new to affiliate marketing – Charles is the best person to go to
With his humble beginnings overseas, Charles would be a perfect mentor for someone feeling trapped with not much to look forward to in future. Listen to his story and be amazed and inspired… starting with nothing to where he is! He will teach you about the power of perseverance. Well done Charles
A unique and profound CEO I have seen in our times, I have seen the calibre in Charles. Charles has a performing influence drive from his desires to do work in an extraordinary way. Charles is adeliver, you will not regret working on projects with him
I Studied with Vincent Kaluwasha during this programme. A highly skilled and knowledgeable individual. Passionate about Occupational Health and would suitably work in the is capacity anywhere in the world”.
JACOB JOSEPH SAKALA-NURSE CONSULTANT
Charles is a man with a great deal of integrity and takes pride in his work
I’ve known Charles for many years and every encounter has been a happy one….he has a wonderful attitude towards life. He is a man of integrity
C J Investiment helped me to secure my first investment with couple of weeks. I will recommend their services to anyone looking for best investment in any city or country
I have seen how Charles has evolved from nothing to setting up a real estate portfolio with determination -Jessica McDade He is a man of integrity and passion who leaves a stone unturned!
All the developers of D5 Creation have come from the disadvantaged part or group of the society. All have established themselves after a long and hard struggle in their life
Thanks to you Charles, we can be there when the worst happens to give people the emergency medical care they need – and rapid transport to hospital. Your support means that CareFlight can fly at a few minutes’ notice, to some of the most inhospitable places in this country. It means patients like Simon can be reached quickly with hospital-level emergency care at the scene – and in cases like Simon’s every minute counts.
On behalf of everyone at CareFlight, thank you for your generosity – and have a wonderful holiday season. Thank you so much
Dear CVK, Awesome, a huge thank you for your prompt response!!! I feel blessed to know you.I love your inspiring video and I have learnt a lot from your nicely arranged presentation. I can’t remember the question I paused to you myself but it feels like whatever it was I asked you has been effectively dealt with in your powerful video. By the way, I strongly feel you can make a good mentor of mine considering the massive education and experience you have acquired through the years. Let me know if you can do this for me because I firmly believe there is a purpose why God brings certain people into our lives which is to help us achieve our fullest potential and arrive at our God-given destiny. Remain blessed forevermore in Jesus mighty name, Amena!!! By the way, many thanks for your quick encouraging feedback and for the free book offer on how to attract people to my biz.Will study the book ASAP and I should be able to implement what I will learn and will see where that will take me. I am looking forward to a rewarding interaction between the two of us. Once again, thank you for your non-wavering support and encouragement you have rendered to me over the years. I thought you had given up on me and forgotten about me since I appeared to be wasting your time. I am still interested in salvaging my life and do something new and big because I am tired and sick of living a mediocre kind of life. Please help me if you can by God’s grace. Have a blessed day my Brotherman
Charles, right now, a lot of people in this country are saying, “Thank you.”Thank you for being there when they needed help most. Thank you for taking charge when their world was turning upside down. Thank you for giving them confidence, when they were afraid and needed life-saving help. As a CareFlight Support Crew Member, you are making such a difference for so many people. Your regular donations help save lives and keep families together. Patients like Thomas, who told us, “You made it possible for me to survive.”And Agnes, who said, “I’m very grateful a service like CareFlight exists.”Below are some more messages of thanks: Thanks from the patients you help. As we head into another year, we know there will be even more people who will call on our services. So, I’d like to add my heartfelt thanks to those of our patients, for your steadfast support. Together we are ensuring CareFlight is always there for people when they call for our help. Whether it’s intubating a patient at the scene of an accident, or ensuring a newborn is safe on a flight from a remote area to a major hospital for treatment, our patients cannot speak highly enough of the care they receive. Charles, that care is part of a chain that starts with people like you. These expressions of gratitude, from all over the country and from all walks of life, show you how much your support is valued – and how much it is needed, more than ever. We can’t do what we do without you.
If this year has taught us anything so far, it’s that none of us ever truly know what is around the corner.
That’s why I can’t thank you enough for your support that ensures we can continue to provide life-saving aeromedical care to Australians most in need.
Our CareFlight crews are in a unique position to understand what Australians have been going through. Every day, we care for people who have found their world shaken by a sudden accident or illness – coping with circumstances almost none expected to face when they woke up that morning.
People like Simon Bowman don’t like to rely on others for help. But one day, as he lay trapped inside his car after a terrible road accident, with suspected injuries to his spine and shoulder and a possible head trauma, Simon needed life-saving help desperately. CareFlight was there in a matter of minutes.
CareFlight’s rapid response helicopter service is so vital in situations like this. Our crew can be airborne in minutes and by the side of our patient, delivering hospital-level emergency care as fast as possible.
Simon doesn’t remember much about his accident, but he does recall the voices of the CareFlight crew as they worked urgently to treat his injuries. Simon told us: “I knew there was someone looking after me and that I was in good hands.”
Our mission is to deliver people the very best care. We’ve spearheaded international aeromedical innovations such as our stretcher bridge system and become the first civilian service to carry blood plasma to the scene of an accident.
The care, the state-of-the-art equipment, those voices which reassure patients that they are in the hands of skilled professionals they can trust – it’s all thanks to people like you.
Simon has recovered and recently visited our base to meet some of the crew. He has never forgotten the help he received from CareFlight, so meeting them again was an emotional experience.
Seeing the helicopter that transported him to hospital, he was amazed at its size. He confessed he’d never been that keen on helicopters, “but I was very keen that one was there that day.”
Your support for CareFlight is helping to save so many lives, like Simon’s.
Thank you so much.
HAPPY BIRTHDAY, CEO!! peacemaker, Shepherd, wise, intelligent, focused, hardworking, caring, loving, forgiving, Husband, Granddad and most importantly best Father Charles V. Kaluwasha. We’ve been truly blessed to have you as our mentor and protector. We thank God for keeping you alive and healthy. Today we celebrate your 60th, a blessed milestone! Next, we count down to your 100th BIRTHDAY. WE LOVE YOU and pray we have you as our father in the next life- @Kendy Kaluwasha
Charles is a very intelligent individual and is very knowledgeable in regards to the Australian Real Estate market. We continue to work a long side each other and we will be for a very long time. He is a much needed asset to my business and growth of my business in the future.
Charles, is very knowledgeable about real estate and great person to connect with. He teaches what he has done himself.
My great sponsor, you inspired me a lot, you are really God sent, to make life better for me, I will not hide it from you, that I really have a little bit of financial contains, because all what I was saving for my travel I left 60%of the money to take care of my two children, to buy a bag of rice and different foods stuff. so here in Monrovia I don’t want to sit idle I just want to start some clothing business, so I am pleading what everything you help me with for the sake of God Almighty, God will surely triple it in return. Thanks sir and God bless you the great man one day you will be the richest man in Zambia, God bless you. I pray that the money will grow more than ten billion dollars. Amen sir, thank you sir, one day you will be a leader in Zambia, by the Grace of God, that my vision for you sir.
Thank you sir hope your work and business expand. Greatness is your portion on a daily basis. You inspire many to pursue their dream, so good to see you pave the way.
You are just not any other resource mwanta, but a creative, proactive and as sharp as a double-edged sword. I love the way you have put together connected opportunities available in our programme and the turning of light by the blind buddy. This is awesome, This is incredible!! https://www.entredevec.com/
Hello. How was the day?
Mine was fine, and I was reading the testimonies people are presenting about you.
You are great, and I want to learn from you.
I am really impressed with your work, experience and expertise. Continue helping us.
The book Launch speech
On 25 November, my co-authors and I had to present our speeches.
One week later, this is what people had to say…
Mwebantu…who has @Charles Kaluwasha speech at the book launch 😄
It was POWERFUL-Cranston
I tell you, that was captivating I don’t think people remembered to press record.
For the book am reading ba @Charles Kaluwasha story and while reading am imagining it being told just like the speech 😀. -Cranston
I hope someone captured it; maybe check the zoom recording as well.
He was on fire 🔥 🔥🔥🔥🔥
It was fun to listen to. –Cranston
Personally, I can confess…after technical difficulties and having to personally meet and speak to the VIPs I invited…it was VERY refreshing to sit in the audience and just take in what you had to say. It was so good 😄-Cranston
Yeah, he was on fire…I thought he was going to make a book launch altar call 😄. There was so much energy, and time was not our best ally; otherwise, we were going to spend a night there.- Paster Kennedy Phiri
The story is also good, so authentic and inspiring. If I was not yet abroad, that is the story I would like to read.
The speech made me want to read it first, despite being the last reading 📖.-Theresa D’Amaden