Michael’s Top Predictions For 2023, A Headline That’s Not Reality & A Rare Moment Of Adoration
For us, today is an anniversary of sorts…well kind of.
This is the 600th newsletter I’ve written since I started ‘penning’ my thoughts way back in 2011.
I think the first newsletter was read by about 800 people (I’d kept a database for a long time but didn’t really do that much with it).
I’m sure many of the people on my database back then just deleted it as they were likely sick of standard real estate agent emails filled with brags about recent sales, tips on decluttering and recipes for a chocolate cake.
Some of you might think that mine may not be too different than this but I try to keep it interesting.
Today, it’s read by more than 40,000 people so I guess we’ve had some success with this.
I receive a lot of great comments about my newsletter when I meet people at open homes and appraisals…and I really appreciate the feedback I receive from everyone.
My alarm goes off at 4:30 AM on a Wednesday and that’s when I make myself a coffee, sit down in my office at home and start typing.
It’s nice to be up at this time of the year but it’s not so easy in Winter…and hearing that people enjoy reading my blogs gives me the motivation to keep writing them.
Whilst you’re still reading them, I’ll keep writing them so hopefully I can produce another 600 that are interesting enough to keep you interested.
Following on from last year’s report card where I graded myself on last year’s predictions, today I’ll share with you my ‘Top 10 Predictions for 2023”.
This has become one of my more popular blogs of the year so let’s get right into it…
- The property market in Brisbane to drop by 5-6% – As I shared last week, Brisbane dropped by a measly 1.1% in 2022 and that’s well short of our southern counterparts. You might have seen the media about “The Biggest Price drop in history” over the past few days (more about this in my blog next week) and this relates to the fall from the top of the market…which (nationally) is an 8.4% drop over the past 9 months. Some have accused me of being a little pessimistic about the property market for the past 12-18 months now but it’s just that I believe a market correction was coming…and come it has. In saying this, there are reasons why I believe it will drop a little further but no fall through the floor like many ‘dooms-dayers’ are predicting. Queensland is usually “propped up” by migration flow and at the very heart of things, I do believe that this will continue.
- Coastal markets to continue to grow but not in the areas you’d expect: We’re still bound to see more Aussies choosing to retire and trade in their family home for a unit near the water somewhere in Australia. But what we’ve seen in 2022 is that certain coastal markets are simply over-cooked. I predicted the Sunshine Coast to be one of the best performing markets in Australia last year and whilst it did accelerate in growth, it’s quickly becoming unaffordable for many, and prices are generally suffering there too. Right now, we’re still seeing record sales in Noosa (only last week we saw a home sell for $19.6 million and this is only weeks after a record sale of $27 million) but surely this is a market that has to stop somewhere. Do retirees really want to confront the ‘hustle and bustle’ of a congested holiday destination or are they seeking a simpler lifestyle where they can relax and not have to battle tourists to obtain a local parking spot? With growth of cities like Townsville (up 40% last year despite the extreme interest rate rises), I think the answer is obvious. I believe areas like Hervey Bay, Bundaberg, Gladstone and Cairns (as well as smaller towns strewn along the coastline in between) will offer some reasonable growth this year.
- The number of transactions to fall by 20% and the number of real estate agents to reduce by 10% – “Hallelujah!” you’re all chanting… “Less real estate agents!”. One of the reasons that I believe prices will hold a little better than many are expecting is that homeowners will simply ‘bunker’ down and ride out of the storm of increased living costs and continued interest rate rises. There are always people that need to sell and there’s always people that need to buy but with an influx of Australians now prioritising travel (because they’ve been largely unable to do so for a few years), living in a bigger and better home is not as important as it was when everyone was facing the uncertainty of lockdowns and COVID restrictions. As such, there will be less properties for sale on the market (we’re already seeing signs of this now) and because of this, many agents simply won’t be able to make a living. More about this in coming weeks.
- Interest rates to increase a little further before a couple of interest rate decreases and stabilising towards the end of the year/ RBA Governor Philip Lowe to Be Sacked – As the year of 2023 closes out, I believe interest rates won’t be very different to where they are now although we’ll see a few fluctuations along the way. The Reserve Bank needs to curb the huge inflation figures but is already facing pressure from homeowners that are struggling to meet their increased repayments. It’s a tightrope they’re walking on and one that will be almost impossible to make everyone happy. We’ll certainly see more media coverage about the RBA over the next few months with more scrutiny on whether they left it too late before they started raising rates (and more scrutiny on the promises they made that interest rates wouldn’t rise untill 2024). In the end, some action will need to be taken to appease the masses and Philip Lowe will be the fall guy.
- Rental figures to increase by another 10-20% in capital cities – With less first homeowners simply unable to borrow the money they require to afford their first property, there will be increased pressure on rental availability. When you add in the increased immigration numbers that are required to fill jobs, our rental market will be under enormous pressure, and we’ll see even crazier scenes than we’ve already seen as competition for rental properties increases. As I’ve discussed recently, we have the stupidity of numerous State Governments that are tightening tenancy laws, and all this is doing is discouraging some investors from owning rental properties…at a time when we need more investors than we’ve ever had.
- Federal Budget to include rental assistance for low-income earners – One of the biggest surprises to me last year was the Labour Government’s quite conservative Federal Budget. But this year, there will be increased media coverage on the unaffordability of rentals…and the Government will simply be forced to take action. Expect that this will be the biggest spend in the Government’s budget and will be a move met with great popularity from the Australian public. If the Federal Government was truly ready to tackle the rental crisis, they’d also provide tax incentives for investors, but I don’t believe this will happen…at least, not to the degree that is required to make a significant difference.
- Number of property owners in mortgage default to hit record numbers – This is a sad prediction but one that I think will be true. In Australia right now, there’s about 2/3 of mortgage holders on a ‘fixed interest’ loan (with most of these locking in at anywhere between 2% and 3% over the past couple of years. In 2023 alone, 1/3 of these will come off the ‘fixed term’ and onto the variable rate (studies have concluded their repayments will be an average of 45% higher than they are now). With increased costs of living (groceries, electricity, gas, petrol etc), many won’t be able to make ends meet. For many reasons, I don’t believe that this will affect the property market to a large degree in 2023 (I’ll discuss more about this in coming weeks too) but it will leave many in significant financial stress in the latter part of the year.
- Australia to narrowly avoid a ‘Recession’ as many western countries enter yet another recession – We’re virtually the only Western country that’s avoided a recession in the past 20 years and you’d think that we’re overdue but yet again, we have certain economic factors that will underpin many of the issues that we’re facing. Rising immigration levels and our slowly improving relationship with China (hence increased coal exports on the horizon) will provide an economic safety net that other nations simply don’t have. Even New Zealand (whose economy has been a pretty close mirror of ours for a long time) is tipped by their own Government to enter a shallow recession in the second quarter of 2023.
- More ‘Discount Fee’ Agency models to ‘come out of the woodwork’ – Now that real estate prices have exploded (when you compare prices from 2-3 years ago), there will be many that will try to ‘corner’ the market and provide a viable cut-price alternative to a traditional agency. You might remember the company ‘Purple Bricks’ from a few years ago? Unfortunately, their model was unsustainable in Australia from a corporate level and they went broke relatively shortly after they launched. Years before this, ‘Go Gecko’ made a splash in this space (and they’re still around in pockets) although yet again, the corporate entity went bust for various reasons. Unfortunately, many home owners are ‘suckered in’ to believing that a cheaper commission means more money in their pockets (and this will be an intense focus for many as they strive to keep the wolves from the door if they need to sell) but the problem here is that these models usually attract inexperienced agents who don’t have the skill to sell for the same prices as an experienced agent. And worse still, they’re carrying so many listings that they don’t have the resources to thoroughly implement an effective sales process. Get ready – I’m sure we’ll see a few new players in this space before we’re singing ‘Auld Lang Syne’ again.
- Larger Crypto-currencies to experience small gains – As I shared with you last week, I’m no expert in Crypto-currency but given my success of predicting that Bitcoin values would plummet in 2022 (when most were predicting the commodity to continue to grow at exponential rates), My rationale for this is that ‘Crypto’ has no real intrinsic value and the value is purely based upon it’s potential for another investor. I’ve been asked by many what I think Cryptocurrency will do in 2023. For many that have asked me, I think it’s a little bit like ‘Paul’ the Octopus that predicted many of the Football World Cup results back in 2010 – it’s a cute little thing to see the success levels can remain but we all know it’s just a streak of luck. If I try to put my intellect to work, I don’t believe that Crypto’s will bounce back to the lofty levels we saw previously (mainly because plenty have lost a huge amount of money here in the past 12 months (what other commodity has dropped by 70% in value over this time?) but there will be those that believe it is stabilising and only has one way to go. One ‘Bitcoin’ is currently worth $17,442 USD as I write this blog. I anticipate it will be worth somewhere between $21,000 and $24,000 USD by the end of the year. Can lightning strike twice?
Bonus Prediction (as I couldn’t fit all of my predictions into 10):
- The Parramatta Eels to break their 37-year premiership drought and win the NRL Grand Final – OK it’s fair to say that this prediction isn’t really that surprising given I have been predicting it for many years now. Perhaps I’m running on the theory that “Even a broken clock is right twice per day” if I keep predicting it. But my beloved Eels went ‘Oh so close’ last year only to falter at the hands of the Panthers after defeating them twice in the regular season. Critics of the Eels will point to the fact that we’ve lost Reed Mahoney, Isaiah Papali’i, and Marata Nuikore but we have recruited the experienced hooker Josh Hodgson (who can hopefully remain fit) as well as younger talent such as J’maine Hopgood and Jack Murchie. Many believe the illusive ‘Premiership window’ has shut for the Eels but they’re not the only high-performing club that has lost key talent heading into 2023 due to salary cap restrictions so I remain hopeful that the Eels can finally break their hoodoo.
As always, I’ll be providing a mid-year report card based on these predictions and a final report card in the first week of 2024.
I’m coming off a pretty good year so I’m hoping I can only improve my grades.
Do you have any grand predictions for 2023? I’d love to hear about them and might share a few if you’re game to email them to me at ms@innov8property.com.au
Here’s to a huge 2023 and as always, Happy Listing and Happy Selling.
See you next week.
Feature Property Of The Week…
This week’s Feature Property of the Week is 4 Majestic Street, Narangba – This gorgeous modern high-set residence offers 4 generous bedrooms, 2 stylish bathrooms, 2 living spaces, a stunning renovated kitchen with smooth stone bench tops and upmarket appliances and (last but certainly not least), a wonderfully expansive entertainer’s deck that offers panoramic views of the Glasshouse Mountains and distant skyline. Occupying a generous 700m2 block with an easy drive-through access and ample grassy yard, this property is very close to arterial roads, shops, schools and trains…showcasing one of the many reasons why Narangba is one tipped to be one of the biggest growth suburbs in the years to come. Brand new to the market so Be Quick!
Hilltop Haven With Opulence, Privacy & Stunning Panoramic Views
Insights Article…
As Michael mentioned in his blog today, there’s been significant media coverage highlighting the biggest fall on record for the property market (it’s dropped by 8.4% from the peak which was approximately 9 months ago). Michael believes that this is still more of a ‘headline’ than current reality as the market is ticking along reasonably well right now. In any event, this is worth a read…
Click Here To Read Article
Did You Know…
Michael’s little kids (Hunter and Harper) are either best friends or mortal enemies (Michael says that it’s more often the latter) but they do have a few moments that he cherishes. He managed to capture a ‘rare’ moment where they were adoring each other (Michael swears that this photo wasn’t staged in any way).
In 2022, ‘The Michael Spillane Team’ made more than 74% of their sales to buyers that lived more than 5km from the property that they purchased. Michael has a strong belief that buyers coming from a distance are usually the ones prepared to pay higher prices and as such, should be targeted more than many agents do. If you’d like to know how to attract more ‘out of area’ buyers, call Michael for a confidential chat and he can explain how we do this.
