Our year in review and looking towards Melbourne’s real estate market in 2023
Reflecting on the last twelve months, I feel a sense of gratitude for how the Jellis Craig network has grown and thrived during a demanding period. Looking toward to 2023, I am optimistic that there are positive signs for Melbourne’s residential property market, some of which I will outline below.
There is no question that this calendar year has been a challenging one for the property industry. As predicted last year, rising inflation meant that the Reserve Bank of Australia (RBA) had to make necessary adjustments to interest rates. These adjustments came in the form of eight consecutive rate rises from May until December 2022. The impact of these rate rises was relatively swift – a reduction in borrowing power for buyers meant Melbourne’s median house price reduced by 9% in Q3 ’22 to $993,000*, compared with $1,091,000 the same time last year.
The Jellis Craig network had a year of solid results in 2022. Our market share continues to increase and we’re proud to have sold more than $9bn of our clients’ properties in 2022.
We also welcomed the Williamstown team to our network, further cementing our position as the real estate group at the heart of Melbourne property.
It has been an interesting period for the rental market. On the one hand, rents are increasing and vacancy rates are at an all-time low (1.1% for the month of November in metropolitan Melbourne^) which has been positive for our more than 20,000 landlords. However, low levels of available housing is having an impact on renters and there is no doubt that there is a severe housing shortage in our state and across the country. We continue to advocate for government action and support in this area for the benefit of our community.
As for the year ahead, I foresee positive signs for the residential property market in 2023. I believe we will start to see clearer signals of inflation being tempered and the RBA easing or even pausing rate rises. The RBA’s actions will cause the market to shift and adjust to new interest rate levels, which will result in an immediate impact on consumer sentiment. Further tailwinds include overseas migration, which is well and truly back, along with strong employment. Once the sentiment heads in a positive direction again, prices should recover reasonably quickly to late 2022 levels.
A note of caution however, some headwinds remain – a wave of fixed rate loan expiries for some, the prevalence of stubborn inflation, affordability issues and geopolitical tensions may continue to impact the market. Nevertheless, I personally feel quite positive about what is to come next year.
Thank you to our clients for your trust and support. I wish you all the very best for a wonderful festive season and look forward to working with you throughout the course of 2023.
Source: *REIV, ^Domain