2023 Outlook for Real Estate & Construction Industry
The Australian housing and construction market has been in turmoil for the past few years, between the pandemic and the economic ups and downs, but one report has forecast some changes to take place over the next 12 months. The LJ Hooker Trends Report has identified a shift in some of the major trends throughout 2023.
Housing affordability has been difficult, and interest rates have been rising, causing the outlook for real estate in 2023 to change. First-time home buyers, tenants, and investors are all looking at property in a new way. So what can the real estate and construction industry expect over the next year? Let’s take a look.
Tenants will Start To Buy Homes
With rent continuing to climb and sales prices softening a bit, tenants who have been budgeting to buy their first home may jump at the chance. Property buying has cycles, and we’re in the adjustment phase now, where property values have decreased by approximately 6 per cent. Home prices are decreasing slightly for a couple of different reasons.
The first is due to the higher interest rates, which means buyers don’t have as deep a pocket since part of their budget goes toward interest payments.
The second reason is that homes are spending more time on the market and sellers are getting anxious to sell when their properties sit. This combination is giving people a chance to finally buy the home they’ve been dreaming of owning.
Rent Prices Will Continue To Increase
Rental markets will remain tight in 2023, largely due to the arrival of additional international workers and students. The job market is booming, and migrants from all over the world are flocking to Australia to fill the open positions offered and to enjoy the outback while they are down under.
The fact that we have very low vacancy rates in Australia and that people tend to rent first when they move to a new area will cause rental rates to continue to increase during 2023 and over the next few years.
Not only will this issue cause a rise in housing rentals but also in apartment rentals, which will bring new investors to the table. Construction on rental homes and apartments will continue to provide housing for the migration boom.
New Homes Will Become Popular
Even with construction costs continuing to rise, current homeowners will continue to look for new homes. Homeowners are leery about taking on renovation projects because of the lack of quality tradespeople to do the work.
Buyers will purchase new properties to ensure the home is move-in ready, and people selling their homes will upgrade to newly built homes to avoid the renovations. Some are looking to buy vacant land lots to build a new home to their specifications.
People Will Seek Advice Before Making A Move
Homeowners have been gathering information about their local markets and preparing their homes to list. The market is now ready for these people to sell, but before many do, they will seek out advice from those relevant in their local markets.
They will have their properties appraised regularly and ask advice from local realtors as they watch and wait for the signs that it’s time for them to sell. When the time is right, these homeowners will go all in, both selling their homes and jumping into new homes.
People will also consider where the job market is taking them and where new opportunities are popping up the most. They will be reaching out to recruiters, securing solid positions before making the move to unknown territory.
Upgrades Will Dominate The Market
The housing market has remained stagnant, and people are ready for a new adventure. After having been stuck in their homes for a year or two in some cases, people are ready to upgrade, just in case a lockdown happens again in their future.
Tenants will want to upgrade rental properties. During the lockdown, some were stuck in small apartments that aren’t suitable for a true lockdown. These renters will be upgrading to either a better rental or they may take advantage and become first-time home buyers.
Homeowners are upgrading to bigger, more prestigious homes. Many of these buyers will try to get into a new home early in 2023 — before interest rates increase much more. They will be looking to upgrade neighbourhoods and find larger homes.
Another group of homeowners will be looking for a scenery change. After being stuck inside for a number of years, people are longing for the great outdoors. These homeowners will be upgrading to properties with more outdoor space so they can have room to move about should another lockdown ever occur.
The Bottom Line
Overall, the outlook for the construction industry in 2023 is looking up. Rent prices will continue to increase throughout Australia, but that won’t stop people from renting. Investors will continue to build new properties to accommodate the growing group of migrants and people attending universities throughout Australia.
The outlook for the real estate industry in 2023 is also looking up, as people are starting to move to new homes and sell their old as they upgrade. Overall, 2023 looks to be a better year than the past two years in the real estate market.
If you’re looking to move and are in the market for a new line of work, contact our recruitment team. We’d be glad to talk to you about opportunities that can help you move into the area of your dreams.