What. A Year. Between world events and the ever-changing market, we’ve all been rolling with the punches. Thankfully with the RBA paused until February, we can catch our breath and enjoy plenty of holiday festivities! But if this year has left you scratching your head, let me simplify it for you. Here’s what you need to know about the property and finance market in 2023.
Aussies are borrowing. A lot.
Despite the highs and lows of the RBA, it has been a huge year for the property market. In 2023, Aussies borrowed $25 billion to cover mortgages. That’s no big surprise, considering we’ve all had to consider refinancing to make ends meet. But the fact that investor borrowing jumped by $9 million shows how tough the rising interest rates have been on investors, in what was traditionally a way to make money.
Not disheartened by the rising RBA rates though, first home buyers showed up this year, rising by 18.4 per cent. Who would have guessed? That being said, it was basically a game of cat and mouse between capital cities to see who could increase their prices the most. Any guesses for which city took gold?
Perth, the oft-overlooked metro city out west, saw housing prices increase in 99.7 per cent of its suburbs. But to be honest, it wasn’t much better as you head east either. Adelaide took silver with 99 per cent, and Brisbane was literally .3 per cent behind. It’s sad when those stats make Sydney’s 91.4 per cent and Melbourne’s 80.8 per cent look good!
So, if you were looking at relocating in the new year, where would be the smartest financial option for you? Darwin or Hobart. Granted, these cities still saw a rise in market value across nearly 60 per cent of their suburbs, but a sea change to Australia’s far north or south is looking like a pretty good option right now!
The year of variable rates
2023 was not just the year for rising market value, it also signalled a transition in mortgages as Aussies move towards variable-rate loans. It makes sense, given the record-low interest levels we saw in 2020 and 2021. At the time, it was smart for borrowers to sign on the dotted line for a fixed rate loan, but with the market continually surging, homeowners are reverting to higher variable rates. If you are currently on a fixed rate loan (lucky!), most will expire at the end of this year or in 2024, so start looking into your options now.
As we close out the year, one major question keeps coming up. And I’m not talking about ‘when will interest rates stop rising?’ (I can give you an educated guess, but the RBA is its own beast).
Lee, why HAVE interest rates climbed so much?
When some of us are paying an extra $1000 on our mortgage, it’s hard to make sense of the dramatic increase. According to the Reserve Bank, the increase has occurred due to competition. Since April 2022, the cash rate has increased by 4.00. Banks in turn raised their variable rates, so owner-occupiers were slammed with an extra 3.32 per cent, and investors were hit with 3.28.
While interest rates have increased significantly over the past 18 months, this increase, thankfully, has been less than expected due to competition, according to the Reserve Bank. Unfortunately, banks have increased their funding in the last quarter, so we all need to tighten our purse strings as we head into the new year.
Which is where I can help you.
Is one of your New Year’s Resolutions to take greater control of your finances? Or maybe you just need to survive (Valid). Give me a call and let’s suss out your best financial options.
Whether you’re a homeowner, investor, or have a dream of one day owning a property you can actually afford, I have your back. Book an obligation free chat with me here and let’s make it happen.