Prospects are strong for prices to rise in 2023, with economists’ forecasts of big price decline set to be proven inaccurate.
In recent years it’s become common for economists working for the major banks and other institutions to forecast significant price falls – but in each instance they have been wrong, often spectacularly so. Clearly, the average economist has little understanding of property market dynamics.
The key factors putting upward impetus on house prices in 2023 include the serious shortage of homes, with very low vacancies and sharply rising rents. The increased intake of overseas migrants and the return of foreign students will also impact, as will the high level of big infrastructure projects rolling out across Australia.
The RBA’s decisions on interest rates will be a relatively minor factor, a reality not well understood by economists who believe that rates are the only factor in play.
The level of price growth will be moderate, but significant after the difficulties of 2022. There will be regional differences, as is normal, but smaller capital cities and key regional centres will be at the forefront of the growth in the year ahead.