Undeniably, 2020 and 2021 were game changers in the real estate industry. Consistent figures were seen in the first quarter of 2022, but house values in most capital cities fell sharply after that. 

Fast forward to 2023, front page news on The Mercury this week was reporting of a potential ’80k hit to homes’ in our Tasmanian housing market – we wanted to look into this a bit more and see what we could potentially uncover for the future. 

Will 2023 be a BOOM or BUST? Let’s find out…

2022 in Retrospect

Before we move forward to 2023, let’s first take a look back at the highlights of 2022…

After a fantastic surge since July 2020, the Australian market began to cool off in 2022. Tim Lawless, Research Director of CoreLogic, even described 2022 as “a year of contrasts” having witnessed a promising year in its first four months before plummeting drastically in the succeeding months. 

In Hobart alone, everyone has witnessed it earn the top spot for the highest five-year growth in median house price of any capital city going into 2022. Real estate expert John McGrath noted that between 2017 and 2022, the +93.5 percent growth seen in Hobart prices was mainly due to “affordability, lifestyle, and much-improved economic conditions” especially during the height of the global pandemic. 

But the tables have turned and at the end of the year, Hobart’s dwelling values reportedly went down by -6.9 percent annually according to CoreLogic. Among the capitals, this was the third-largest decline after Sydney and Melbourne with -12 percent and -8 percent respectively. It even exceeded the national average of -5.3%.

The Hobart home market began to stagnate, according to real estate agent Mandy Welling of Exceed Property, after the Reserve Bank of Australia (RBA) increased interest rates in 2022. Aside from rising interest rates, cost of living pressures and a decrease in buyers’ Fear of Missing Out (FOMO) have also pushed Hobart property values down. 

Concluding the year, Hobart’s median dwelling value was $673,333, with a median house value of $725,736 and a median unit value of $528,236.

2023 Insights and Predictions

Similar to the past years’ forecasts, this year’s projections are a mixture of positive and negative anticipations. Although none of these is certain, we’d like to take into account the opinions of experts that might help everyone in redirecting their real estate business.

Generally, PropTrack‘s earlier analysis reveals that nationwide housing prices will likely continue to decline through 2023, even in regional areas where values have risen by roughly 50% since the pandemic began.

Australia’s big banks also anticipate that 2023 will be a year of huge price drops. Two of these predict worse futures for Hobart’s home values. The National Australia Bank (NAB) predicts a far larger loss of -16.6 percent while the Commonwealth Bank of Australia (CBA) expects Hobart home values to decline by -8 percent in 2023. 

Similarly, Australia & New Zealand Banking Group Limited (ANZ) expects property values in Hobart to decline by 9 percent in 2023 after already dropping by 8 percent in 2022. The anticipated median home price for 2023 then is $648,310.

While the figures above picture a downturn in Hobart’s real estate market this 2023, it is still worth noting that even if the highest drop prediction of -16.6 percent occurs, it is still 76.9 percent higher than the figures from 2017 where 93.5 percent surge was seen across Hobart. 

In another positive note, according to real estate expert John McGrath, Hobart’s housing demand will eventually rise as the city gradually transitions back to net positive population growth. 

In contrast with the initial claims, the housing market is expected to be held in good stead by Tasmania’s robust economy, which is supported by rising earnings and low unemployment, “with the forecast of pre-pandemic growth levels returning in 2023–24.”

Furthermore, SQM Research’s Housing Boom and Bust Report for 2023 claims that house prices in capital cities will increase by 3 percent to 7 percent, depending on whether interest rates stay below 4 percent, inflation stays below 5 percent, and unemployment stays below 5 percent.

In the same way, Propertyology Head of Research Simon Pressley projects an increase in house prices by two to seven percent in most capital cities and regions in 2023. 

As claimed by Mr Pressley, the strongest performers in 2023 will likely come from areas other than Australia’s main cities, but one may anticipate a return to “near-normal property market performance”. Among all the capital cities, Adelaide and Perth are more likely to be the best performers this year.

On the other hand, mild declines of -2 to 5 percent can be witnessed in the weakest locations including Ballina, Ballarat, Byron, Canberra, Kiama, Melbourne, Noosa, Sydney, Surf Coast, and Warugal. 

In Tasmania, locations with the best potential in 2023, according to Propertyology, include Burnie and Devonport. But overall, Hobart’s real estate growth cycle seems to be coming to an end after an exceptionally sturdy 8 years that saw 130% capital growth and a rise of $11,000 in yearly rent. Despite the fact that the local fundamentals are still strong, Mr Pressley predicts a period of sluggish growth coming–at least for Hobart. 

He also shared how current behaviours and circumstances are similar to those at COVID’s inception. People back then stayed off the field for a while due to uncertainty. Whilst the source of anxiety is different from the situation then, it all boils down to supply issues when the demand for housing increases. But he believes that many of the underlying factors that fueled the 20% capital growth in 2021 are still in place today. The important missing link, according to Mr Pressley, is buyer confidence. 

What’s next?

In the most recent episode of The Property Pod, John McGregor, a Real Estate Agent at 4one4 Property Co., mentioned how the ‘fear of missing out’ is going out of the market. “Based on our experience, there’s no more rush now. Buyers could be a little bit more patient and they just tend to wait to see what happens whereas before, ‘I have to get in and I’ll see what happens’,” Mr McGregor shared.

“We’re seeing it more as a sort of a balanced market slash buyer’s market where now, sellers, if you want to have a crack at a price in this current market, I could probably guarantee that you’re not going to get it.”

Mr McGregor emphasised that purchasers are not in that same headspace anymore so he left a resounding piece of advice for sellers. 

“Make sure you’re committed to the sale because it may not have that same price expectation you could have got.”

Now that you’ve heard the different commentaries of experts and analysts about the market performance this year, you might not end this blog with a solid decision yet, but at least, you can weigh the different sides of the story. 

Remember that fortune always favours the bold. And in times like this, a helping hand from an expert that has been in the industry for a while now or even just a starting one who possesses the potential and passion to serve is truly a massive help. 

We’ve got heaps of hardworking agents at 4one4 Property Co. So if you need help with anything and everything real estate this 2023–and even beyond, feel free to reach out to our friendly team.

You may also check out the latest Property Pod episode as our legendary panel discussed more about this.