New business opportunities for brokers in 2023
Investors keen on a surging rental market and fixed rate customers desperate for help could potentially be the biggest opportunities for brokers in 2023.
Australian property prices are expected to continue falling this year, but perhaps not by as much as the 5.3 per cent slide of 2022 recorded by CoreLogic.
Head of Australian Research Eliza Owen told BrokerZone that more increases in the cash rate and high levels of inflation will continue to hamper appetite for housing.
In a market of limited buying activity, it’s important as a broker to know where to concentrate your efforts.
Investors attracted by surging rental market
One target market may be investors. Rents are soaring after migrants returned to Australia following the easing of pandemic travel restrictions. Annual growth in Australian rent values was a record 10.2 per cent for the 12 months to December, according to CoreLogic.
Ms Owen expects investors will take notice.
“I think investors are going to come back into the market, but they will wait for a pause in rate hikes,” she said.
“There is uncertainty about the rising interest costs of rental properties.
“Even though rents are rising and there are high yields, the uncertainty might hold investors back for the first half of the year.”
The Reserve Bank is tipped to increase the cash rate in February following surging inflation figures, according to Monash University Economics Lecturer Isaac Gross.
First home buyers could be re-emerging
Surging rents and any pause in falling property prices could also lead first home buyers to re-emerge.
Ms Owen said first home buyers were usually the first to respond when property prices “bottomed out”.
“We see first home buyers as a cohort that could grow quickly in the second half of the year,” she said.
Fixed rate loan borrowers exploring their options
Another group brokers may want to consider are new and existing clients who have fixed rate mortgages expiring.
About 66 per cent of fixed-term housing lending contracts are due to expire this year, according to the Reserve Bank’s Financial Stability Review from August 2022.
These fixed contracts were locked in when interest rates of two per cent were common.
These borrowers face a substantial jump in repayments when they secure a new rate in a vastly different economic environment.
There could be opportunities for brokers to help these customers with services such as debt consolidation.
Regional South Australia and Perth may buck trend of property value declines
Then there are the contrasting fortunes of the cities and regions that make up our fair continent.
A few areas are tipped to defy the prevailing market conditions.
“There are not too many areas I would expect to avoid a downturn this year, given higher interest rates,” Ms Own said.
She named regional South Australia as one area that might be in with a chance to buck the trend. Values rose 5.4 per cent over 2022.
Perth has been fairly resilient. Ms Owen said values have fallen less than one per cent from a recent peak.
The cities that tend to lead market movements, Sydney and Melbourne, were forecast to fall in value. However, Ms Owen did not expect the two biggest cities to fall by as much as their 2022 declines of 12.1 and 8.1 per cent respectively.
Speak to the Resimac BDM or Relationship Manager for your state or territory to learn more.