Navigating Australia’s property market is a hot topic right now. After house prices soared to unprecedented heights in the past few years, they’re naturally correcting themselves right now. The big question is… is it a good time to sell? Today we’ll answer this and discuss the pros and cons of selling property in 2023.
Current market conditions
Here’s what you need to know about current market conditions.
Understanding property cycles
According to CoreLogic, the pandemic saw house prices rise 28.9% between September 2020 and May 2022. This is the fastest increase in property values in Australia’s history. This is the cycle peak, also known as a seller’s market. During this phase, you’ll find buyer demand outweighs supply.
A market correction is expected after soaring to history-breaking heights over the past couple of years when the property market moves into the downturn phase. This is where we currently stand. A buyer’s market is a slow period when buyers typically have power over sellers. The next part of the property cycle is stagnation, or the bottom of the market, which experts predict we’ll reach in September.
Then it’s time for the upturn phase, which we should enter in 2024. This equals more buyers entering the market, price rises, and more properties listed for sale.
House price decline
As our property market is currently in the downturn phase, it’s not shocking that the home value index has declined 7.9% nationally between February 2022 and 2023. AMP Chief Economist Shane Oliver predicts prices will drop 15% overall before conditions stabilise in September. However, in promising news, between January and February 2023, national house prices only declined 0.1%.
But not everyone should be concerned with declining prices as it all depends on where you live. For example, regional markets are more resilient regarding interest rate hikes, as house values only declined 4.2% between February 2022 and 2023.
Meanwhile, NSW’s capital city and regional markets took a substantial hit during the same period (13% and 7%, respectively). However, the opposite happened in South Australia, and they’ve seen house prices rise 5% in Adelaide and 13% in regional areas over the last year. Not all hope is lost!
An eye on interest rates
A key factor driving market conditions is the economy and, right now, interest rates. Here are the big four banks’ predictions on rate hikes:
- CBA predicts it will peak at 3.85% in April.
- NAB and ANZ both predict the cash rate will peak at 4.10% in May.
- Westpac believes it will increase to 3.85% in May.
Oliver predicts that house prices will begin to turn around and rise again in September to correspond with the RBA moving toward rate cuts after this peak period.
Pros of selling property in 2023
Here are some advantages to selling property this year.
Smaller price gaps
One of the biggest advantages of selling your home in 2023 is that the price gap between your current home and your next property will be smaller than in previous years. This is great news for sellers hoping to upsize, as it will be more achievable in current conditions.
Buyer’s market
In line with the smaller price gaps, if you’re selling and intending to buy another property, current market conditions are in your favour.
Capital gains
Depending on when investors bought their investment property, they could have potentially earned substantial capital growth. So selling now before property prices drop further might be in some sellers’ best interests. But this depends heavily on your local market conditions, so research before cashing in on your capital gains.
Buyer demand
This is particularly prevalent in capital city markets like Sydney and Melbourne, which have high immigration rates. But rental vacancy rates are at an all-time low, and rental yields are at an all-time high. So property investors will be on the prowl to take advantage of these promising conditions.
Potential buyers under pressure
Interest rate rises have put some prospective buyers under pressure, which is advantageous for sellers. For example, rate hikes equal lower borrowing capacity. So previously, buyers might’ve been able to afford a $1 million loan amount, but now that’s closer to $750,000. People under this time crunch will look at the supply on hand and decide, regardless of market conditions. This works in your favour if you’re a seller.
Optimal conditions for first-time buyers
Another advantage to selling property in 2023 is that experts predict an influx of first-time buyers hoping to finally get on the property ladder. This is thanks to the drop in house prices and new government incentives.
- First Home Buyer Choice: gives buyers the option to pay a smaller annual property tax rather than stamp duty for homes up to $1.5 million.
- Shared Equity Home Buyer Helper: specifically for single parents, single people over 50 or key workers.
- First Home Owner’s Grant: exclusively for new homes.
- First Home Buyer Assistance Scheme: gives you an exemption or reduction of transfer duty charges.
Another reason first-time homeowners are entering the market in 2023 is due to Australia’s current rental crisis. SQM Research revealed that rental vacancy rates across Australia are sitting at just 1%. These conditions will force more renters to become buyers, which is advantageous for sellers.
Cons of selling property in 2023
With advantages come disadvantages, so here are the cons of selling property this year.
Upturn on its way
Because we’re currently in a downturn phase, you know an upturn is slowly on its way. As mentioned, an upturn phase is when more buyers enter the market, and then prices begin to rise. With price increases comes an increase in supply, as potential buyers are eager to purchase before home prices rise even more. Some sellers might want to wait for this opportunistic property cycle and a better price.
Buyer’s market
We mentioned a buyer’s market is advantageous if you’re selling and then buying. However, if you just hope to sell a house and your plans don’t involve buying a new property, current conditions don’t work in your favour. With fewer buyers on the prowl, don’t be surprised if you have to negotiate and settle.
Uncertain economic conditions
While wages and unemployment are currently strong, the Australian economy is looking uncertain right now, especially concerning inflation and interest rates. In this circumstance, it’s not uncommon to think a recession could be in our future. If this prediction is correct, selling a property during a recession can be difficult and involves expert research and timing.
So, is it a good time to sell?
So, should you sell your house now or wait? Besides the listed pros and cons, there are other factors to consider.
A natural part of the property cycle
It’s important to remember that even if the market seems uncertain right now, it’s all relative. Home prices are still higher now than they were in 2020. There are also always new listings and buyer demand, no matter if we’re in the boom or downturn phase of the property cycle. Plus, according to realestate.com.au, the average number of days on the market in December 2022 was just 42, which is very promising.
Individual circumstances
One of the many factors to consider is your own personal circumstances. This might dictate your selling strategy, even if it’s not a good time to sell. This might include:
- A good or bad financial situation.
- Relocating to another state or territory.
- The need to upsize due to a growing family.
- In turn, the need to downsize.
- Cashing in on capital growth.
- Reducing your debt.
- Finding your dream home and needing to claim it.
Local market conditions
Understanding whether it’s a good time to sell depends on your location. Local market trends differ from suburb to suburb. Here are our recommendations:
- Do your research. Head online and look at recent sales of comparable properties in your suburb. This is a great way to determine whether it’s a seller’s market and if you should strike while the iron’s hot.
- Use our free online tool to get a property value estimate. This helps you understand your home’s current worth and whether it’s better to sell your house now or wait.
- Get a free property appraisal from a local real estate agent. While they’ll give you an estimated home value, they can also help you determine whether it’s a good time to sell. An experienced agent will know current market conditions like the back of their hand. So speak to them about current conditions, recent comparable sales, if there’s buyer demand and the best strategy to sell successfully.
To find a local agent, try our free comparison service today.
The next steps to selling property in 2023
Here are the next steps if you’re looking to sell your home in 2023:
- Do your research as stated above and focus on your local market. Look at comparable properties recently sold to gauge buyer interest, speak to a local real estate agent and get an appraisal to determine your home’s worth.
- Work with an experienced agent. They will have sold properties in all market conditions, so you can feel confident they’ll provide the best advice. A good agent will also give you practical advice regarding what local buyers expect so you can prepare your home for sale, whether you list it now or later. This might include easy updates to increase your property’s value, like a fresh coat of paint in the living spaces. While you’re at it, it doesn’t hurt to declutter and de-personalise your home and fix any niggling maintenance issues.
- Ensure your agent creates an effective marketing strategy to target as many prospective buyers as possible. The more people who know your home is for sale, the more likely you’ll sell it for a good price.
Find a skilled real estate agent
When you’ve decided it’s a good time to sell and you’re ready to shop around for a local real estate agent, let us help you. You can anonymously compare agents in your local area with our free online service. Compare their commissions and additional costs, performance data, marketing strategies and homeowner reviews to make an informed decision.