AUSTRALIA'S property market faced the challenge of rising interest rates in 2023 as the Reserve Bank of Australia handed down five cash rate hikes throughout the year.
The first in February lifted it to 3.35 per cent and by November it had reached a 12-year high at 4.35 per cent.
Despite rising interest rates, housing values in the region showed strong signs of recovery.
In November, house and unit values across Newcastle and Lake Macquarie recorded the strongest growth in NSW with a monthly increase of 1.3 per cent.
Since finding a floor in December 2022, housing values in the region have increased by 6.2 per cent.
However, values remain 3.0 per cent below the record high recorded in April last year.
So, what can we expect in 2023? We spoke with property experts about their thoughts for the year ahead:
Eliza Owen - CoreLogic head of research
Broadly, I think it's safe to say that an area like Newcastle and Lake Macquarie is going to continue to see a lot of value over time because they represent not only a natural extension of demand from Sydney, but a great lifestyle and relative affordability.
Long term, I think these markets are in really good stead. Newcastle has really proven itself as a desirable place to live and work and I can't really see I can't see that changing. Having said that, though, in the short term, the housing market performs in these cycles of upswings and downswings.
I would say 2024 for Sydney is looking like a bit of a downswing in the first half of the year and historically, we've seen the Newcastle and Lake Macquarie region perform to that cycle at a bit of a lag. For example, during the Sydney upswing, you might then get demand spillover and then during a downswing, you might eventually get people sort of more interested in Sydney again, which draws away from the major centres. With that in mind, if the trajectory for Sydney is to enter a bit of a downswing now, we might expect to see a little bit of softness in the Newcastle and Lake Macquarie market, mid to late 2024.
The monetary policy will also guide that cycle as well, so obviously it remains very data dependent, but we've seen some very high profile predictions. The IMF [International Monetary Fund], for example, suggests that monetary policy could start easing in the second half of 2024. That's only going to help to bolster demand if the cost of debt falls.
Jackson Morgan - Belle Property real estate agent
In all honesty, I am hoping for little change. The market, vendors and purchasers have gone through so much volatility in the past 12 months that I think it would actually be good for the market to go through a bit of a plateau period.
At the moment with the interest rate rises, buyer confidence has dropped off and it's very dependent on the price point. I'm finding that property under a million dollars is not as affected with all the first time buying grants, etc. Between $1 million and $2 million is probably the most affected price bracket in terms of buyers being a little bit more cautious of how much they're spending. Yes, we're still getting standout great prices for some properties, but then for others, buyers are just being a little bit more logical rather than emotional.
Will we experience growth next year? I think it will start going up a little bit from the middle of the year and then back to slow, steady growth. I'm hoping for no big volatile changes and that 2024 will be the year of stabilisation in the market.
Tom Lemke - Wilton Lemke Stewart real estate agent
I feel that the biggest thing will be in February with the first interest rates announcement of the year and what they will end up doing with that. I'm sure a lot of people will be waiting to see what happens.
Half of what we have been selling in this last quarter of the year has been investment stock and I think we will see more of that.
We will see more out-of-area buyers and a lot of first home buyers are moving from Sydney to Newcastle. I would say the bulk of the buyers in the market are first home buyers and downsizers. That will continue next year.
Homeowners who are on to their second or third home and looking to upsize, they seem a bit more nervous because there is a bit of risk there - they've got young kids and don't want to put it all on the line. They seem to be sitting on their hands.
I still feel like Mayfield, Mayfield East, Georgetown and Kahibah are those middle ring suburbs to watch. They offer affordability in terms of land size and what you can get for your money.
Carly Knight - McGrath New Lambton real estate agent
I think we will see more properties hit the marketplace next year and we will see more properties on the market that have been renovated over the past 12 to 18 months. There are a lot of people out there renovating their existing home with the intention of selling.
We will perhaps see the higher end of the market continue to go up. Demand from first-home buyers is still relatively strong but I think the people who are looking for medium to high end housing, that is a market that is still going very, very strong, especially if it is renovated.
There are lots of developments coming to the fore, like on Brunker Road in Adamstown and in New Lambton Heights there is a project that is one of the very first redevelopments from a single home to a multi unit development. We will see more of those types of properties coming through in the new year.
Joel Soldado - Harcourts Newcastle real estate agent
We will see more properties hit the market next year. I say that because I think that as interest rates stay high, it is putting some pressure on particular investors. It is almost like everyone has been holding out and now they're at a point where interest rates are high, they're coming off these fixed rates and they have realised that it is three times the repayment.
This year was a little slower in listing numbers, it was probably about 30 to 40 per cent down in volume, so I think next year more properties will come onto the market. Prices won't necessarily go up as such because there will be more supply. The way interest rates are at the moment, we've had the adjustment that needed to happen and I think the market will stay fairly flat. Obviously there will be some growth in some pockets but it certainly won't be the growth that we've had over the last two or three years.
As for suburbs to watch, it's hard to not talk about places like Waratah, North Lambton, Mayfield and Wallsend. These suburbs have the infrastructure - good transport, good communities, shops, cafes and transport and schools - and are still close to the city. They are the spots that haven't really taken off like a lot of the inner city suburbs have but as the city starts to expand, the natural progression is going to be that those suburbs go next.
Chad Dunn - Chad Dunn Property Buyers
In 2024, Port Stephens will be a hot spot, from Anna Bay to Fingal Bay and the area in general. Williamtown airport is soon to be international grade and hopefully operating as such from mid 2024. There is also some stats coming out that predict the area is mostly under-supplied with new housing.
The lakefront will be highly desired. 2023 has seen some massive results in the beach areas of our region, but 2024 will have a greater focus on the lakefront locations around the Lake Macquarie region. There are major projects planned for areas around Morisset which is attracting Sydney interest. On the lakefront around the east side in suburbs like Valentine, Marks Point and Eleebana, come 2024 this is where I believe you will start to see the records being broken.
We will see double the number of stock levels seen in 2023. It's a big call and has been talked about for some time, but it did not transpire in 2023. For those that are heavily geared and wanting to de-leverage [downsize the mortgage repayments], as of February 2024 people will be really starting to struggle to maintain the mortgage and additional investment properties with the cost of living pressures. It won't be distressed selling but more so a choice to not be not as exposed. This may mean that the $900,000 to $3 million price points in areas that don't have an edge as mentioned above, will most likely sit on the market for longer and may at times be priced more competitively.
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