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Infolio’s 2023 Market Outlook for Melbourne.

12 December, 2022 / Category: Blog

Infolio’s 2023 Market Outlook for Melbourne. banner image

To close out the year, we sat down with Infolio’s Managing Director, Lauren Staley. We asked Lauren to look into her crystal ball and share her property predictions for the year ahead.

Do you think there will be a property market crash in 2023?

With over 25 years in the property industry, I’ve heard my fair share of market crash predictions. The commentary from real estate pessimists this year is nothing new.

The short answer to this question is no. 

However, we are currently in an adjustment phase, which will continue into quarter one of 2023. In Melbourne, the COVID trough-to-peak growth was 17.3%; we have only seen a 6.4% decline. As I always say, property is a long-term game, and we should keep short-term losses from overshadowing the overwhelmingly positive property fundamentals.

I always refer to these four fundamentals when considering the likelihood of a crash.

  1. There is a shortage of A-grade properties in Melbourne to buy and a general shortage of rental properties of any grade.
  2. Net migration is growing steadily (forecast is 250,000 per year), which will continue to drive demand for real estate. A market crash relies on a significant dip in demand for real estate. 
  3. Construction costs remain high, making building and renovating prohibitive for many, reducing new builds and improvements.
  4. Our economy is still growing, and unemployment is historically low, meaning anyone who wants a job can get a job (so they’ll be able to pay the mortgage repayments.)

How can I time my purchase with the bottom of the market?

I have a get-in-when-you-can philosophy regarding property, and people who try to time the market often fail. However, I advise all my clients who can buy in 2023 to buy in the year’s first half or risk getting caught in the upswing. I expect the market will have a V-shaped correction, so you’re better off buying in as soon as you can to maximise your capital growth when this takes place. 

Should I be buying an investment property in 2023?

Investors should be optimistic about 2023. All the fundamentals point to a year of rental growth, competitive buy-in prices and increasing demand.

Vacancy rates are already at all-time lows, Melbourne’s average is 1.4%, and Infolio’s Property Management portfolio is currently less than 1%. Rental properties are hard to find and highly competitive when they hit the market. There is some construction forecast for 2023 and 2024; however, we expect rents to grow in the short and long term. 

The competitive buy-in prices will only last for a while. You can maximise capital growth and rental returns if you get in now.

When will it be the right time to trade up?

The trade-up market is excellent at the moment. The upper end of the market has come back by almost 10%, narrowing the gap. Vendor discounts have also increased from about 2.9%* to 4.2%*, allowing for more significant savings on the trade-up property.

The challenge is finding the right property. Vendor hesitancy is strong, leading to fewer choices for buyers. We are seeing a considerable amount of properties come to us off-market, with many vendors preparing to take their property to market next year but would sell this year if they had a good offer. If you can find the right property this side of Christmas or early January, chances are you’ll be able to negotiate a good deal.

When should I put my property on the market?

Vendors ready to sell should get their properties on the market as soon as possible. Many homeowners with low fixed mortgage rates will roll over to current rates in the next three to six months. This will result in more properties hitting the market, with vendors forced to sell or choosing to trade while they re-finance. This will mean greater competition and pressure on sales results, especially for B and C-Grade properties.

Thinking of buying or selling in 2023?

Are you thinking of buying or selling? Please feel free to contact us for a free 15-minute discovery call. We can let you know the best timing for your specific circumstances and the best areas and property types.



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