5 Real Estate Trends to Watch Out for 2023
The real estate market is one of the fastest-growing industries this year. Find out what spurs its growth and what’s in store for 2023.
Market research conclusions for real estate are conflicting. Some research forecasts real estate growth for 2023, while others are not so positive about it.
Some research predicts that the housing market will continue to perform better than in the pre-pandemic periods. While others expect that the rising inflation rate will continue to dampen the demand.
What’s the future for real estate in 2023? Here are 5 real estate trends to watch out for:
1. Rise In Demand Continues
If there’s one thing that the pandemic taught people all over the world, it’s the importance of having a home. The home is the new office. And many workers globally prefer to work at home than go to their offices.
Health and safety concerns may also contribute to this rise in demand. However, increasing prices of construction materials may lead to more unaffordable homes— a challenge that real estate companies need to address.
2. Increase In Investments
With the increase in demand for homes comes an expected increase in investments. The pandemic-induced home purchases are likely to continue in 2023. In the US, housing that generates a steady cash flow (such as multifamily housing) remains popular, with almost 15% of housing stock in the US made up of multifamily housing.
3. Rise In Prices Will Slow Down
Although the prices for housing will continue to increase, they’re expected to slow down in 2023. According to a poll by Reuters, home price rises were predicted to slow to 6.5% in 2022 and 3.0% in 2023, compared to the 7.5% and 4.5% increase rates in previous estimates.
Experts explain that although the demand for residential properties is high in 2022, this trend could change next year due to rising costs of living and increasing mortgage rates.
4. Soaring Interest Rates
You may already see a pattern here. Everything seems to be rising and that includes interest rates. The increase in interest rates may, however, vary depending on the location.
In the US, mortgage rates recently jumped above 6%, their highest point since late 2008. According to experts in real estate in Dubai, interest rates in the region may continue to rise with monthly mortgage payments skyrocketing up to 50% higher than in the same period last year.
5. Increased demand for luxury properties
Despite the pandemic, the global wealth was reported to grow during the past two years, leading to an increase in High-Net-Worth (HNW) individuals worth over $30 million by 10%.
Last year, global luxury home markets continued to soar. Now, with the restrictions on mobility easing and the property market starting to look positive, the ultra-wealthy have been keen on investing in luxury properties.
In Dubai, the demand for luxury villas has grown exponentially in recent years. This led to an increase in prices for luxury properties such as the Palm Jumeirah and the Dubai Residence complex with reported price increases of up to 30% over the past year.
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