Looking Back on 2023

Interest rates climbed and then plateaued

From May 2022, the Reserve Bank of Australia (RBA) began an aggressive cycle of tightening the cash rate in order to get inflation under control.

In 2023, we saw the RBA lift the cash rate in February, March, May, June and November, leaving mortgage holders grappling with rising repayments and cost-of-living pressures.

This month, the cash rate has remained on hold at 4.35% as the RBA assesses the impact of the increased interest rates and the economic outlook. 

The RBA went under the microscope

In April 2023, Treasurer Jim Chalmers released the findings of the Review of the Reserve Bank. It was the first external review of Australia’s central bank in four decades.

Some of the key recommendations included:

·         The RBA should have a ‘monetary policy board’ with greater economic expertise and shift to eight meetings a year (instead of 11) to allow more time to consider issues.

·         There should be a press conference after each meeting to encourage more transparency, and board members should speak publicly about the board’s work.

·         Two separate boards should be established – one for monetary policy, the other for governance of the RBA.

·         The inflation target of two to three per cent should be retained.

·         There should be five-yearly reviews of the RBA’s monetary policy framework and policy tools.

Meanwhile, Michele Bullock was appointed as the RBA’s first female Governor, taking over from Philip Lowe on September 18. She said her priority was to develop a “culture of sharing, debate and respectful challenge” inside the bank.

Property prices rebounded in many markets

In good news for homeowners, property prices climbed in many markets in 2023.

Despite rising interest rates, we saw a 2.3% increase in property prices over the first six months of 2023, and the upwards trend continued in the second half of the year.

A lack of supply of available properties was one of the main driving factors propping up property price growth.

Rents skyrocketed

Rents across Australia rose at a rapid pace in 2023, with landlords hiking rents to cover rising mortgage repayments.

Limited rental supply added fuel to the fire, set against the backdrop of a surge in Australia’s migrant population growth.