Welcome to the December edition of Month in Review
2023 has been another eventful year for Australian real estate. It’s been filled with conflicting drivers that have pushed and pulled property values and market activity.
Interest rate movements have been a major influence. It’s apparent from this month’s submissions that in many centres, markets fluctuated in response to the rising cash rate. There was cautious optimism that the hold in April heralded the end of the cycle – but that didn’t last long. Steady rates through July to October provided some hope we’d reached the peak, but the November increase – the first move for new RBA Governor, Michele Bullock – and subsequent commentary has caused pause for thought.
Then there’s been the continued increase in construction costs. Price gains for a range of baseline materials have slowed but labour is now in short supply and as such, costs remain high and timelines extended.
Another huge issue has been the rental market. There simply isn’t enough available housing to meet the demand for shelter and that’s seen vacancy rates plummet and rents ramp up. The high cost of building has reduced the supply of new rental accommodation, while increased compliance and taxation caused many mum-and-dad investors to exit the residential investment market. And despite high immigration helping bolster the economy, there’s little doubt that a record number of new arrivals has fuelled more demand for rentals.
Another piece of the property market puzzle is overall economic uncertainty in the face of high inflation and cost of living. This has occurred as households drain away the last of COVID-era savings and many move from fixed to variable interest loans.
What’s perhaps most striking is that in the face of all these market levers pulling in different directions, property has proved a resilient and stable asset class for those with a long-term outlook. Values have, overall, increased this year and selling activity remains robust. It’s been a safe haven for capital investment in 2023.
This has all been founded in the lack of supply – both for sales and rentals. Without more supply, housing prices and rents will remain elevated and will likely increase into 2024 as well.
It’s also been a year of significant change here at Herron Todd White, with plenty of good news to report.
In 2023 we embarked on the development of innovative platforms and internal systems that will enhance our client offering. We’re also excited to be working with the CSIRO and Natters to help develop a new energy rating pilot program that will be a significant addition to the property landscape.
In addition, Herron Todd White welcomed a raft of new executives to the organisation’s leadership team. The Board appointed Sheena Wilson as Chair and Andrew Wellington as Deputy Chair this year. Jarrod Harper joined as a new member of the Board and rural identity John McKillop became head of our Agribusiness division.
One final observation… we’re seeing a heady amount of activity across our industry right through to the holidays. There appears to be an appetite among businesses to keep up their momentum which makes me optimistic about next year’s property sector and the economy.
I and my entire team want to wish every one of you a happy holiday season. May you find plenty of time to relax with loved ones and enjoy all that the season has to offer. Thank you for all your support throughout 2023 and we look forward to catching up again next year.