The lights on the tree are on, the presents are wrapped, the kids are days away from running wild for the next six weeks, and you’re probably wondering how the end of 2022 is almost upon us! 

When it comes to 2022, I’ll remember it as a year of extremes in multiple facets. 

Extreme Price Growth 

2022 started with a bang, with Australia experiencing universal price growth around most of the country. This trend carried over from the post-pandemic property boom that saw many Australian homes grow by 15% – 25% in a short period. Many Wealtholgy clients saw 30% price growth across their portfolios and monumental price growth before their properties were even completed.  

This price growth was to fade as Australia (and the world) grappled with rising inflation, and the solution didn’t fare well for property owners. Continued below… 

Extreme Interest Rate Rises 

The RBA broke almost every record in the book regarding the intervals and amount of interest rate rises that occurred in 2022. Interest rate rises of 0.50% intervals have not been seen since 2000.  

Not to mention that the RBA has increased interest rates for a continual seven months, which has not been for a least 30 years.  

The cash rate at the start of 2022 started at 0.10% and now sits at 2.85%. However, with another interest rate rise expected before Christmas, this could increase in the lead-up to Christmas. 

Extreme Rental Shortages & Rental Vacancies 

The only thing on a prospective tenant’s wish list this Christmas is a roof over their head. The sad reality facing many over the festive period is the prospect of homelessness in 2023.   

Renters around the country have been battered from pillar to post, with vacancy rates around the country sitting below 1% at various times throughout the year.  

The situation doesn’t seem to look likely to improve, with vacancy rates continuing to dip in areas such as Brisbane, Perth and Adelaide, as well as many regional locations. 

Extreme Rental Price Increases 

Not only is it tough to find a rental, but if you do manage to find one, you’ll need to be prepared to pay for it. Whilst this isn’t great news for renters, landlords have been licking their lips with areas such as Brisbane seeing almost a 20% rise in rental prices.  

These rental increases have seen many property investors enjoy a better net cash flow position despite interest rates and increased gross rental yields. 

As the rental shortage in Australia only seems to worsen, investors can expect more of the same in 2023. 

Extreme Media Reporting 

“Property market set to crash by 50%”, “Property Price Apocalypse”, and other sensationalist headlines dominated much of the tabloids in 2022.  

With a fleeting moment dominated by a Will Smith slap, business soon returned “as usual” with journalists remembering that nothing sells papers more than property crash hysteria, and they sure did give it a red-hot crack! 

In reality, a property market crash was far from realistic; Sydney experienced the worst of it but barely equivalent to a flesh wound with a decline of 6.65%. 

Extreme Opportunity  

As we approach the end of 2022 and leading into 2023, property investors should be considering the “extreme opportunity” currently available. 

Interest rates are the only real factor behind the slowdown in property price growth, and we know that interest rates are only being increased to curb inflation. 

It looks increasingly evident that inflation seems to be somewhat under control and stabilising, and the RBA looks to establish the “new normal” in relation to expected rates. 

In 2023 you can expect buyer confidence to return and recover swiftly. The small percentage of decline in property values will be recovered and prices will accelerate past previous highs. 

Right now, the extreme opportunity is that property investors can secure the top echelon of real estate at a slightly discounted price.  

Not to mention that they can almost bank on the fact that rental yields and weekly asking amounts are practically guaranteed to increase in 2023.   

It also looks likely that interest rates will drop in mid-2023 (possibly in Q1), providing a level of surety in relation to whether you can afford to purchase. 

If you can afford to invest in a property right now, you need to be taking action. 

We could be looking at the last time it was relatively affordable to purchase a property.  

What you pay today will look cheap tomorrow. 

Our team are here and ready to help you build a more secure tomorrow. 

Reach out to me personally – leonie@wealthology.com.au