6 . Rental pain to continue
Population growth and restrictions to housing supply show up most quickly in rental rates , although as discussed above , will also impact pricing in 2023 . With population growth accelerating in 2023 , as well as construction problems continuing to slow down housing supply , rents will continue to rise . One balancing factor will be lower levels of household formation . Moving out of home , or leaving a shared house , will become less likely as rents and the cost of living continue to rise .
7 . Building to become easier but remain challenging
Construction costs are now the biggest component of inflation , having risen by over 20 per cent over the last 12 months . Interest rate rises however are slowing down demand for renovating and building new homes . Similarly , many of the problems that have plagued the industry such as blocked supply chains and labour shortages are now being resolved . Building costs are unlikely to drop considerably however it ’ s likely that it will be easier to find a builder in 2023 and cost escalations will slow .
8 . Housing affordability to remain a hot topic
It was a hot topic before the pandemic and after seeing the strongest house price growth ever recorded through 2021 , it ’ s now an even more urgent issue . Most recently , the Productivity Commission has found that many first home buyer incentives introduced over the past decade have worsened affordability , as opposed to making it easier for people to get into the market . As a result , expect a greater focus on housing supply , rental stress and social housing .
Nerida Conisbee Chief Economist Ray White Group
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