Property settlements double in 4 years despite hurdles of 2023

Australian property sale settlements have almost doubled over the last 4 years according to new information from data research firm, PEXA. 

This follows a decline of 11.8% in 2022, although it is still a higher rate of sales than in 2020 and 2019 respectively. 

Numerous headwinds caused by geopolitical pressures and rising inflation made 2022 a difficult year for the Australian property market, generally. However, despite this, there does seem to be some hope going into 2023. 

What are property settlements?

Also known as a home loan settlement, a property settlement is the last step of purchasing a property after you’ve finalised the deposit and contracts. In essence, this is the part of the process where you go from buyer to legal owner of the property in question. 

The settlement period generally takes anywhere between 4-6 weeks and begins on the day of the contract of sale until the agreed upon settlement date.

Are property settlements expected to grow this year?

Although the “total volume of sales settlements” was down in 2022, it followed on from 2021 where record low interest rates caused the property market to see a sharp upswing. 

Contrasted against the higher rate environment of 2022, it's no wonder 2021 was such a high growth year.

Looking at PEXA’s property insight report shows that, despite the disruptions of the past few years, market conditions are beginning to normalise. Also, while it’s true that 2022 had a marked downside in comparison to 2021, the overall trend is still positive when compared to the other previous years. 

So, there has been a contraction but it isn’t out of the question for 2023 to continue the upward trend that has continued over the past four years. 

What headwinds could impact property in 2023?

Despite some positive long term trends, tightening monetary policies and general economic cycles may continue to pressure the housing market. 

Some of these pressures have been occurring since the pandemic, including people looking for a tree-change or sea-change in regional spots, moving away from the city. Regional prices climbed in recent years but have since stabilised and even dropped. 

Meanwhile, city prices have been generally falling and that has been attributed to a range of factors, including a shortage of buyers in a high interest rate environment. 

However, higher migration numbers to Australia may see a return to a more competitive property market as seen previously. Amid short housing supply, this could see prices rise again. 

Overall, while the year ahead may be difficult, we might soon get a more stable market once interest rate rises are halted. 

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