Welcome to the whirlwind of the Australian property market in 2023! If you’ve been trying to make heads or tails of the housing landscape, you’re not alone. Prices are soaring, and the available properties are few and far between.

Let's delve deep into the dynamics at play, and arm you with strategies to navigate this challenging terrain, whether you're renting or buying.

The 2023 Australian Property Landscape

In 2022, it was reported that property prices fell in some major cities by up to 12%, which whilst it was a decline still meant that property prices were above pre-Covid levels. Why? Various economic factors played a part, from a recovering post-pandemic economy to an uptick in domestic and international investments.

But 2023 has shown the market recovering and strengthening quite quickly, particularly over Q2 and Q3 of the calendar year. With a combination of population growth outpacing property development and an influx of international investments, prices have only climbed higher.

What’s even more challenging is the sharp decline in vacancy rates. In cities like Sydney and Melbourne, vacancy rates have dropped below 2% as of early 2023. But what does this mean for you? In simple terms: more competition. But fret not! There are always strategies to give yourself an edge.

The Supply of Property

Over the past 12 months to July 2023, listings across the country have declined by 17.7%, and by 21.3% across the regional areas across Australia. At the same time, we’ve seen an average increase in rental prices across the country of 9.4%, and this has been as high as 13.5% in Perth, 12.9% in Melbourne, and 12.4% in Sydney.

All of this paints a picture of a tight market for both buyers and renters looking to either find and secure their new home, or to purchase an investment property.

Strategies for Renters

Renting can often feel like you're battling in a highly competitive arena. But there are benefits, especially in a market like this. Renting offers you flexibility. In uncertain times, you might not be ready to lay down roots, and renting offers an escape from long-term financial commitments.

To ensure you're in the best position to snag that rental:

• Build a Robust Rental Application: This is your first impression. Make sure you have references ready, offer a longer lease if possible, or even consider paying a few months in advance if you have the financial capacity.
• Consider Off-Peak Rental Periods: December and January can be quieter months for the rental market, giving you a better shot at securing a place.
• Broaden Your Horizons: Think about looking in suburbs that might not have been your first choice. Emerging areas can offer affordable rents and may even become the next hotspots!
• Be Quick to Inspect: Always try to attend the first inspection. Being early in the process can give you an advantage, especially if you're prepared to apply on the spot.
• Personalise Your Application: Include a cover letter with your rental application. Personal stories can make you stand out, letting the property manager or landlord get to know you better.
• Improve Your Credit Score: A good credit history can make you a preferred tenant in the eyes of landlords.
• Offer Flexibility: If you can, offer a lease start date that suits the landlord or even a slightly higher rent if it's within your budget.
• Expand Your Search Platforms: Beyond popular platforms, consider local community boards, social media groups, or even word-of-mouth through friends and family.
• Have a Backup: Always have a backup property in mind. This reduces the disappointment of missing out on your top choice and keeps the momentum going.
• Understand Your Rights: Familiarise yourself with the local rental regulations to ensure you're not being taken advantage of.
• Network with Real Estate Agents: Building a rapport with local agents can sometimes lead to opportunities before they're listed.

Case Study: Jane's Success in Melbourne

Jane faced the Melbourne market's intense competition but approached her rental search like a job application. She set up email alerts for new listings, submitted her applications within hours of listings going live, and built rapport with estate agents. After two months, Jane secured a two-bedroom apartment in a growing suburb. Her secret? Perseverance and a standout application.

Strategies for Buyers

You might be thinking, "Is buying property even possible right now?" Absolutely. Remember, property, especially in Australia, is a long-term game. Prices may be high, but historically, they've always trended upwards over extended periods.

• Get a Pre-Approved Mortgage: This isn’t just paperwork. It shows sellers you're serious and financially ready. In a market where every edge counts, this can place you at the front of the pack.
• Research Emerging Neighbourhoods: Everyone wants a slice of the established suburbs, but emerging areas can offer value for money and substantial future growth.
• Utilise a Buyer’s Agent: They can give you access to properties before they hit the market, giving you a valuable head-start.
• Attend Workshops: Many local councils and organisations run first-time homebuyer workshops. These can provide valuable insights and resources.
• Check for Off-Market Listings: Sometimes, properties are sold without being publicly advertised. Networking and working with agents can give you access to these.
• Inspect Thoroughly: Ensure you get a good property inspection. In a competitive market, some issues might be glossed over, and you want to avoid expensive surprises.
• Stay Updated with Interest Rates: In fluctuating markets, understanding interest rates can help you lock in the best mortgage deal.
• Consider Joint Ventures: Teaming up with a trusted friend or family member can increase your purchasing power and open up more options.
• Think Long-Term: Instead of focusing on immediate returns or the "perfect" home, consider properties that have potential for growth or can be renovated in the future.
• Stay Emotionally Detached: In a high-pressure market, decisions can sometimes be rushed. Always take a step back, assess, and ensure you're making a choice for the right reasons.
• Re-evaluate Regularly: If you've been on the hunt for a while without success, take a moment to reassess your priorities, budget, and strategy.

Integrating these strategies can provide renters and buyers with a broader toolkit to approach the 2023 Australian property market. Armed with knowledge and a flexible approach, you can make informed decisions that align with your goals and current market realities.

Coping with the Financial Strain

Yes, it’s an expensive market, but financial planning can be your best friend. Here’s where you start:

• Prioritise Saving and Budgeting: Tools like the ‘First Home Super Saver Scheme’ launched in 2017 can help. By 2022, numerous success stories emerged of Aussies using this to their advantage.
• Grants and Financial Programs: Take advantage of state-specific grants for first-time homebuyers. In 2022, several states revised their grant structures to support buyers further. Ensure you’re up-to-date with the 2023 offerings.
• Rent vs. Buy: Sit down and run the numbers. If buying seems too daunting, maybe now’s the time to save aggressively and wait for your ideal opportunity.

In Conclusion

The 2023 Australian property market might seem like uncharted waters. But with diligent research, a clear strategy, and persistence, you can find your footing. Whether you're renting or buying, remember that this market is just a snapshot in time. Your decisions, based on sound strategy and patience, can pave the way for a bright property future.

Good luck out there! And remember, every challenge also brings opportunity.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.