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Property predictions for 2023
Insurance insights

Property predictions for 2023

22 Dec 2022 7 mins read

What lies in store for the property market in 2023? We’ve looked at some of the research and pinpointed a couple of key trends. Read on to find out more...

Following what has been dubbed a ‘once-in-a-generation’ property boom in 2021, which saw housing demand rise to an all-time high, house prices soar, supply dwindle, interest rates hit rock bottom and buyer priorities shift, 2022 is the year where the transition into a downturn began.

As Domain’s End of Year Wrap notes, the eye-watering pace of growth was not sustainable in the long-term. Affordability became a heightened issue for buyers and the cost of servicing a home loan became a worry for mortgagees.

“The rental market became extraordinarily tight, our CBDs returned to life, tourism and overseas migration trickled back and skilled migration became a key focus for population growth,” Domain said. 

Now we don’t have a crystal ball, but there are a few property pundits who have a track-record of hazarding a pretty good guess about what is on the property horizon and we’ve taken a hard look at what they have to say – so we can share it with you. So what’s likely to be in store for property in 2023, how will this affect landlords and what do you need to know from an insurance perspective? Here’s a run-down:

Interest rate impacts

For the first time since November 2010, the RBA began lifting the official cash rate in May 2022 – and has kept upping the rate each month since. The official cash rate is now at its highest level since 2015 and the RBA has indicated more rate rises are on the cards to try to counter inflation.

Rising rates are expected to continue affecting borrowing capacity and repayments. Investors have been subdued over the last couple of years and ABS figures show that lending to investors was down 17% in 2022. Research from Property Investment Professionals of Australia (PIPA) suggests many landlords have been holding steady as securing finance, affordability, interest rates and rental yields have all been deterrents to transacting.  

Insurance note: Although money may be tighter thanks to rising interest rates and inflation, keeping the investment property insured is crucial. Landlord insurance protects against some of the common risks landlords face and the cover is a safety net in case those risks eventuate. The last thing you want is to find that you’re facing a huge bill for damage to your rental, or loss of rent, at a time when you may least be able to afford it.

Continuing tight rental market

Listings have been few and far between (in November 2022 the vacancy rate was at the lowest point on record at 0.8%) and rents have been high (capital city rental growth peaked at 3.1% in July) – and that’s expected to attract investors back into the market in 2023. The Australian Financial Review suggests that residential rents will continue to rise in the next 12 months and beyond. For smaller investors who can contribute a healthy amount of equity to a property purchase, this presents an opportunity to buy homes at the lower end of the price scale knowing rising rents will help underpin the value of the property and somewhat offset higher interest rates.

Insurance note: Despite it being a landlord’s market, and you potentially being inundated with rental applications, it is still important for landlords and property managers to vet prospective tenants carefully. Getting the wrong tenant into the property can be a nightmare if things go wrong. It’s also why having good insurance for the property which covers some of the risks that ‘bad’ tenants pose (like malicious damage, loss of rent, denial of access or legal battles) is a wise investment.

Property prices to fall further

Stats show 2022 was when property prices started to fall. CoreLogic figures reveal dwelling prices had fallen for seven consecutive months by November 2022 to be
-3.2% lower for the year. Most property commentators – including the major banks – believe 2023 will see prices fall further with many experts forecasting a 15-20% drop.

The fall in prices, coupled with high demand and high rents, has a number of experts predicting more investors may enter the rental market in 2023. For example, PIPA notes that, with the prospect of even higher interest rates curbing the number of competing owner-occupier buyers, cashed-up investors should do well in 2023 with those high rents, record-low vacancy rates and recovering yields, as prices continue to soften.

Insurance note: For landlords looking to add to their portfolios, one of the first things you should do is arrange landlord insurance. Cover should be taken out as soon as you enter into a contract of sale because, from this point onwards, you have an insurable interest in the property. Don’t wait until you have tenants as there are things that could go wrong in the interim that could cost you dearly if you don’t have insurance (like someone such as your property manager, a tradie or prospective tenant being injured on the property, the property being broken into, or wild weather causing damage).

Immigration set to grow

With Australia’s borders re-opened, the influx of immigrants is expected to continue. And with the new arrivals comes increased demand for rental accommodation, including student accommodation. The booming market for rentals may entice strategic investors to add to their portfolios or enter the market, according to Domain. The competition for the limited number of rentals may see asking rents head even higher as landlords are spoilt for choice with prospective tenants.

Insurance note: Be sure to take out the right cover. How you are letting your property will determine what type of policy you will need. For example, a landlord policy may be what you need, or you may need a different policy if you’re offering certain types of student accommodation. If in doubt about the right policy, always check with the insurance provider. 

Lifestyle and the ‘right suburb’ prioritised

Keyword searches in 2022 analysed by Domain and PropTrack found that lifestyle additions (like ‘pool’) and location (like ‘waterfront’, ‘beach’ and ‘view’) were high on wish lists. Rising construction costs and the lack of trades to complete work also means that new and renovated homes will stay popular, according to LJ Hooker. It’s expected this will continue into 2023 with buyers willing to pay a premium for the right neighbourhood and their home’s liveability features. Buyers and renters alike will continue to want more space, added security, the right amenities and easy access to education, sports facilities and green space.

Insurance note: Be sure that the landlord policy that you take out is designed to cover the risks your particular letting scenario presents. Property that is rented on a standard lease has different risks to short-term rentals, fully-furnished homes need more contents cover than unfurnished, and apartments have different insurance needs to detached houses.


All the best research and years of experience is no guarantee that the forecasters will be right. The property market’s rollercoaster ride will likely have some dips and rises, but nothing’s certain. What landlords can be sure of is that they will need to protect their investment properties. While you can’t insure against market factors, you can protect your rental from a range of events that could derail your year financially – things like property damage, loss of rent, wild weather, theft and legal liability. This is where having the right landlord insurance is key. You need a policy that covers the unique risks you face based on the type of property and the letting scenario.

A word about the insurance market heading into 2023. Like most industries, insurance is not immune from the micro and macro-economic factors at play. In the last few years, property insurances, which includes landlord, strata and home and contents covers, have been affected by market conditions including inflation, supply chain disruptions, materials and labour shortages and a raft of natural disasters. In insurance speak, it’s been a ‘hard market’ which is characterised by fewer insurers offering over, lower limits of cover, higher premiums, higher excesses and more onerous conditions.

Insurance industry experts, including our colleagues at EBM Insurance & Risk, predict that the hard market conditions will continue in 2023, which may have a flow-on effect to the availability and cost of landlord policies. While premium increases are stabilising for most property risks (including landlord policies), insurers are increasingly focussed on the potential losses related to natural catastrophes, in particular floods, and properties at higher risk may be more difficult to insure.

Keeping up with what is happening in the property market is something savvy investors do – and an imperative for property managers – but perhaps even more important is ensuring that your investment strategy includes protecting your rental from insurable risks no matter where along the rollercoaster ride the market is travelling. Start 2023 by checking that you have the right landlord insurance for your rental.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions. 

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