EWRE 2023 Season’s Greetings

 

 

A time to reflect on 2023

 

The end of every year is a time of reflection. We delight in goals achieved and revisit the plans that did not work out. Real estate plans for many have resulted in buying or leasing a new home or investment. However, for many 2023 has been a real estate annus horribilis.

 

Almost daily coverage by news outlets on the increases in the cost of living, rising housing interest rates and surging rent prices. 2023 will be remembered as hard for making ends meet and a year that undid many peoples’ plans. Inflation was arguably the word that could define 2023 even though it became a buzzword in 2022.

 

2023 is when people wanted to know when this financial caused by inflation pain would stop. The question everyone was asking was how long to lower inflation. Unfortunately, we transact in a global economy and restrictions on the goods and services we use mean scarcity and in a nutshell that often creates inflation.

 

The rising cost of living seemed to be the most impassioned conversation at every water cooler, BBQ, pub and café in the country. The stress endured by people is palpable and the weekly shopping left everyone with less money to enjoy the discretionary items that make life fun. Consumers were unable to spend as they had previously directly impacted small businesses. ABS data revealed that half of new businesses shut down between 2019 and 2023, leaving Australian business closures at their worst rate in 15 years.

 

The Reserve Bank of Australia (RBA) imposed a total rate increase for 2023 of 1.25% per annum, increasing the cash rate by 0.25% per annum in February, March, May, June and November. The rate hikes were the RBS’s response to curbing inflation however many are unconvinced that housing should be the main lever to pull. People have white-knuckled 2023 with the cost of housing the biggest burden.

 

The Australian Bureau of Statistics (ABS) reported that in 2023 rent prices have increased for nearly 75 percent of properties, a significant jump from the pre-pandemic rate of around 25 percent. These rises have people leaving areas they work near, families they may rely on and communities they are part of. The only positive that came from this rental misery was that rental accommodation needs to be fit for purpose and laws to ensure property maintenance has been updated. Many rental providers may have seen this as negative but well-maintained houses are better investments.

 

2023 will be the year we remember for rampant inflation, interest rate hikes, unbearable rental increases and the surging cost of living. All these have negatively affected real estate prices – both sales and leases. Whilst many property owners have enjoyed increased prices, the vast majority of people have been shut out of buying and leasing.

 

Final thoughts for 2023

 

Whilst 2023 has been hard we need to accept it was out of our control. We can look abroad and feel blessed we live in a safe, peaceful country that is the envy of the world. Economies endure problems and then there are periods of stability – the forecast for 2024 is that the worst is over.

 

As trite as it sounds, health, family and friends are our real wealth and are a great hedge fund. Happy holidays to everyone and have a wonderful New Year’s from the EWRE team.