Monday 13 February 2023
What does the future of real estate look like?
The new year brings in a new set of changes and disruptions within every industry, including real estate.
Learning about the trends set to change the property market can help you better prepare for your investments and purchases, helping you pivot when necessary. Knowing what to expect will also ensure that you make more informed decisions about your potential property investments.
Top 5 property trends in 2023 to look forward to
We’ve shortlisted this year’s most relevant real estate trends, discussing how each one will impact you personally as well as the property industry as a whole.
Keep reading to learn more.
Rising interest rates to influence housing prices
Interest rates were significantly high in 2022, but the rate hikes are an effective way to quell inflation. So while the majority of Australians are used to low-interest rates, they’re expected to continue rising in the next several months.
There are different factors that might lower these interest rates, though decreasing interest rates are usually a sign of a stagnating economy. The conditions for lower interest rates include a rising unemployment rate and a weakening economy, with inflation at 2% to 3%.
The global economic climate can also impact Australia’s economy, particularly since the United States and Europe forecasted a recession this year. Experts expect that it will take two years for the interest rate movement to cycle through the economy, provided that wages don’t increase significantly.
While higher interest rates reflect a growing economy, it means higher mortgage rates and housing prices for Australian homebuyers, impacting property prices in 2023. It also depends on whether the government will provide any financial aid or support for banks and individuals to address this issue. So, it’s important to stay on top of any institutional financial packages that you can leverage for your current and future property purchases or investments.
Continued property growth for smaller Australian capitals and regional areas
In 2022, there was a growing boom for regional property markets in Australia as more people sought properties away from the major capital cities. Population growth is one of the primary drivers for internal migration in regional areas such as the Gold Coast and Sunshine Coast, but another crucial factor for the popularity of regional markets is the proximity to major cities.
Cities that are a commutable distance from capital cities allow people to enjoy a regional lifestyle while maintaining access to employment opportunities and amenities available in the capital. The Covid-19 pandemic has only exacerbated the demand for regional properties, resulting in an increase in property prices.
The surging property prices have slowed down the demand in the regional property market as potential homeowners and property buyers shift their focus to alternative options. According to Property Tribue, smaller capitals — such as Adelaide, Brisbane and Perth — are set to replace regional areas as the top hotspots for the property market in 2023.
If you’re looking for properties in smaller cities and regional areas, here are the locations you should consider for 2023:
Regional Western Australia
The affordability of these property hotspots, combined with the laidback regional lifestyle they offer, make these locations an attractive option in case you’re planning to purchase or invest in regional property this year.
Proliferation of sustainable initiatives in real estate
As more people continue to become aware of climate change and global warming, consumers expect more green initiatives to be integrated into different aspects of their lives.
This has led to a growing need and demand for sustainable property in residential and commercial spaces. Sustainable real estate has numerous benefits for everyone in the property market — from property developers and real estate agents to buyers and tenants.
Some of the advantages of investing in sustainable real estate include:
Lower operational costs - Sustainable real estate is designed to use resources more efficiently, which results in lower costs for heating, cooling and operating the building.
Lower carbon footprint - Each step in the building timeline, from the design and construction to operation, has an impact on the planet. Using sustainable design and materials can reduce the building’s negative effects on the environment.
Healthier communities - Sustainable buildings can create healthier communities within the area because they use less pollutive methods and toxic materials, allowing the surrounding environment to flourish.
Improved brand image and reputation - Choosing to invest in and develop sustainable buildings demonstrates your commitment to your community and by extension, the planet. This builds deeper connections and strengthens community relationships.
There are key trends and trajectories around sustainable real estate that can affect the property market this year:
Focus on energy efficiency - There’s continuous innovation in energy-efficient appliances, automation technologies and passive energy design. This allows dwellings and office buildings to use energy more efficiently.
Use of ethically sourced green-building materials - Sustainable building projects use low-carbon materials such as reclaimed lumber and steel, as well as plant-based materials like bamboo and hemp.
Influence of buyer preference and industry compliance - The support of forward-thinking buyers and developers are crucial in the proliferation of sustainable real estate. Sustainable building practices are slowly but surely becoming mandatory for all industries.
Increased premium on properties that are in the right neighbourhood
Location is always an important factor for a potential property purchase, but the onslaught of Covid-19 has further emphasised the importance of living in a good location that has all the essentials.
We can expect listings to increase prices for properties located in great neighbourhoods, as well as buyers that would pay a premium to be in those neighbourhoods. The pandemic has only increased the popularity of the “20-minute neighbourhood”, which is a concept typically used within property planning and development circles.
As the name suggests, a 20-minute neighbourhood ensures that everything that people need is in 20-minute proximity from where they live, such as public transport, schools, hospitals, parks and grocery stores. The majority of inner suburbs in Australia's capital cities have successfully developed 20-minute neighbourhoods, and many middle suburban neighbourhoods are working to meet this 20-minute proximity litmus test.
The immigration boom to drive up housing demand
According to The Guardian, migration to Australia is set to rebound to pre-pandemic levels, increasing the immigration boom in the country. When borders reopened in late 2021, there was an inflow of 150,000 migrant arrivals, which is on track to increase to 235,000 in 2023. This will, of course, drive up housing properties and demand, impacting the competition in the property market.
The real estate industry is expected to go through a lot of changes, influenced by economic, environmental and sociopolitical factors. Learning about the latest property trends can give you a clear understanding of how your current and potential property purchases will be impacted this year.
You can discover the latest real estate updates and insights on our website. Stay tuned for our next blog.