How you can get rich and make money in 2023 as inflation soars and house prices ... trends now Smart Australians can take advantage of unique conditions and make money in 2023 despite cost of living pressures and surging interest rates. Those able to find enough savings may still have some success on the share market next year, provided they invest wisely and focus on companies they are likely to have healthy earnings. The property market is expected to struggle but savers and canny investors have some good prospects as global political turmoil pushes up demand for key Australian commodities. Mining shares are expected to surge in 2023 because of a shortage of key commodities needed for both traditional, coal-fired energy and renewable power. Coal prices in 2022 more than doubled to record highs above $US400 a tonne after Russia's Ukraine invasion saw much of Europe scramble for new energy supplies, as gas supplies were squeezed. Mining shares are expected to surge in 2023 as house prices fall because of Reserve Bank interest rate rises (pictured is a Rio Tinto engineer in Western Australia's Pilbara region) Shares expected to grow BHP: Diversified mining giant RIO TINTO: Diversified mining giant FORTESCUE METALS GROUP: Iron ore miner WHITEHAVEN COAL: Thermal coal miner NEW HOPE: Thermal coal miner CORONADO GLOBAL RESOURCES: Metallurgical coal miner PILBARA MINERALS: Lithium producer LIONTOWN RESOURCES: Lithium producer Advertisement Commodity prices like iron ore and metallurgical coal, used to make steel, are also expected to remain in hot demand as China scraps hated Covid restrictions, benefitting diversified mining giants BHP and Rio Tinto. The strong push for electric vehicles in China and Europe is also expected to see demand surge for lithium, needed for battery storage, with lesser-known Australian companies set to do well. Coal is expected to thrive next year, despite the push for renewable energy. But high inflation is likely to persist into 2023, which means house prices are likely to continue plunging as interest rates keep on rising. House price falls of 20 per cent are predicted for Australia, with the Reserve Bank's eight successive monthly rate rises far from the last. Inflation in the year to September surged by 7.3 per cent - the steepest increase in 32 years and at a level more than double the RBA's 2 to 3 per cent target. The Reserve Bank is expecting headline inflation, also known as the consumer price index, to hit reach 8 per cent by the end of 2022 for the first time since 1990. With inflation likely to remain a problem in 2023, Daily Mail Australia looks at where you should invest your money on the Australian Securities Exchange as real estate becomes a less attractive option. Shares Saxo market strategist Jessica Amir said mining shares - from the diversified mining giants like BHP and Rio Tinto - to the specialist coal, iron ore and lithium miners were likely to thrive in 2023. 'You don't have to look far: you just have to say, 'What is gaining momentum?' and think about the long-term trends,' she told Daily Mail Australia. 'What is going to do well when interest rates keep on rising and what company is going to be able to continue to grow their earnings and cash flow? Saxo market strategist Jessica Amir said mining shares - from the diversified mining giants like BHP and Rio Tinto - to the specialist coal, iron ore and lithium miners were likely to thrive in 2023 'Because that's how you get continued share price growth.' BHP shares from late October to late December surged by 24 per cent to $46 while Rio Tinto during that time soared 30 per cent to $115. Fortescue Metals Group has seen its price climb 40 per cent to $20.60 since the end of October. Russia's Ukraine invasion led to sanctions from the EU, and constrained the supply of Russian gas to Europe. This has seen demand surge for thermal coal, despite a push for renewable energy, with the spot price of coal rising above $US400 a tonne. India and Indonesia, meanwhile, have become major buyers of Australian coal, filling the void left by China when it slapped punitive tariffs on the lucrative Australian export in 2020 following calls for an inquiry into the origins of Covid. Ms Amir said the strong demand for thermal coal was likely to benefit not just BHP and Rio Tinto, but also specialist thermal coal miners Whitehaven and New Hope, as the northern hemisphere endured a freezing winter. 'We've been alerting investors to the fact that there is more upside in coal and the reason for that is we usually see a volume demand spike in January - it's the thick of winter in the northern hemisphere,' she said. Metallurgical coal miner Coronado Global Resources and iron ore miner Fortescue Metals Group would be the main beneficiaries of China needing more metallurgical coal and iron ore, following with unwinding of Covid restrictions. Australian metallurgical coal and iron ore miners would be the main beneficiaries of China needing more metallurgical coal and iron ore, following with unwinding of Covid restrictions (pictured are travellers in Shanghai in December 2022) Westpac gives its tips on the two kinds of coal Westpac senior economist Justin Smirk said demand for thermal coal was likely to have peaked. 'You've got some commodities, particularly like coal, that are going to be under some pretty meaningful downward pressure from extremely high levels,' he said. But Mr Smirk said global demand for iron ore and metallurgical coal, used to make steel, was likely to ramp up as the likes of China expanded its reliance on renewable energy. 'It also means demand for steel to build infrastructure,' he said. 'A new, more positive investment cycle, that's more broad-based around the world, that can support a lot of our commodity base, perhaps also giving some longevity to our heavy exports including iron ore and metallurgical coal. 'This could produce some meaningful upside surprises on some of our key exports.' Mr Smirk argued China would start exporting more of its coal to the developing world as it needed less for electricity generation in future years, which could see the spot price of coal fall back to $US70 a tonne. 'They're going to become an exporter because they've got too much coal,' he said. 'It also has the potential to produce an excess of coal. 'The fact that China's making such a rapid transition in its energy market, it could potentially become a large exporter.' Mr Smirk said this would potentially expose coal to 'a very big, large crash' despite rising demand in India, south-east Asia and the developing world. 'That extra rebalancing given the fact Australia is a major coal exporter normally to fill the holes, could be the bit that tips the market over,' he said. 'I'd be very hesitant to say it had a low probability.' Advertisement 'The key commodities that are exposed to China are likely to continue to see more upside and that means a likely, more share price growth indeed into 2023,' Ms Amir said. 'They can potentially look at increasing productivity as a nation and of course, they've had bad economic figures of late, and they want to turn things around. 'That means, given they're heavily industrial-driven, they're probably going to need to pick up buying in iron ore and met coal so they can get stuff done.' Glencore in December announce it had scrapped plans for a new $1.5billion mine in central Queensland, known as Valeria, with Australia aiming for a net zero by 2050 emissions target and banks now refusing to lend for thermal coal mines. But Ms Amir said a development like that meant there would be less supply of coal - thermal and metallurgical - just as global demand was rising, with bad weather in Australia from La Nina flooding cutting production. 'With an energy crisis, all prices of coal essentially rise,' she said. 'And both of them are supported to the upside because there is lack of supply.' China, along with the European Union, is aiming to lead the transition to electric vehicles. 'You've got China and Europe that are expected to account for 80 per cent of electric vehicle sales by 2025,' Ms Amir said. 'That means they're going to be wanting lithium.' The EU is moving to ban the sale of new petrol and diesel cars by 2035 as China, the United States and, to a lesser extent Australia, give out electric vehicle subsidies. This would mean more demand for lithium, needed for battery-power storage. Pilbara Minerals, Australia's biggest lithium producer, has a supply deal with China's Great Wall Motors and Chinese battery manufacturer Gangfeng Lithium. 'Pilbara Minerals was the first mover in Australia - there's a lot to be said about first movers because they typically gain market share before anyone else can catch up,' Ms Amir said. Liontown Resources has supply deals with Tesla, Ford and Korean battery maker LG Energy Solution. Then there are other lithium players Allkem, Core Lithium and Sayona Mining. Prolonged fighting between Russia and Ukraine is also expected to hit the global supply of wheat, which would agricultural stocks like Graincorp, Australian Agricultural Company, Elders and Costa Group. China, along with the European Union, is aiming to lead the transition to electric vehicles (pictured is a Volkswagen ID made in Shanghai) Travel booking companies like Flight Centre and Webjet, and airline Qantas would benefit from Australians being able to holiday overseas again, while Treasury Wines and pubs operator Endeavour Group would do well from Australians being able to party again. House prices The big banks and the credit ratings agencies are expecting house price falls of up to 20 per cent, over 2022 and 2023. Sydney, Australia's most expensive capital city market, peaked in April when the Reserve Bank cash rate was still at a record-low of 0.1 per cent. Since then, the median house price has dived by 11.9 per cent to $1.243million in November, CoreLogic data showed. Credit ratings agency Fitch Ratings is expecting Australian house price to plunge by another 10 per cent in 2023, on top of a likely 7 per cent drop in 2022. 'Increasing mortgage rates, high inflation and sluggish wage growth will stretch borrowers' capacity to afford home purchases,' it said. The big banks and the credit ratings agencies are expecting house price falls of up to 20 per cent, over 2022 and 2023 (pictured are houses in the Brisbane suburb of Paddington) Australia's best savings rates per annum JUDO BANK: 4.95 per cent for a five-year term deposit BANK OF QUEENSLAND: 4.75 per cent for savers aged 14 to 35 on its Future Saver product VIRGIN MONEY: 4.6 per cent for balances up to $250,000 on its Boost Saver product ING: 4.55 per cent on its Savings Maximiser product WESTPAC: 4.35 per cent for customers aged 18 to 29 with a Spend&Save account Source: RateCity Advertisement A 17 per cent drop, over two years, would see Sydney's median house price dive by $224,120, from $1.375million at the end of 2021. AMP Capital chief economist Shane Oliver is expecting a bigger 20 per cent drop, from the peak in April 2022 to the trough in September 2023. This was see Sydney's median house price dive by $283,392 from $1.415million. In both cases, the mid-point price would fall to $1.1million to $1.2million - a level still beyond the reach of an average, full-time worker earning $92,030 who wishes to buy alone. The Reserve Bank of Australia has, in 2022, hiked the cash rate over eight consecutive months from May to December, taking it to a 10-year high of 3.1 per cent. This was the most in a row since the RBA began publishing a target cash rate in January 1990. Westpac and ANZ are expecting the RBA to hike rates three more times in February, March and May to a new 11-year high of 3.85 per cent. That means house prices are more likely to keep falling because banks can't lend as much. The banks - under Australian Prudential Regulation Authority rules - are required to assess a new borrower's ability to cope with a three percentage point increase in variable mortgage rates. For savers aged 14 to 35, Bank of Queensland offered the best rate of 4.75 per cent on its Future Saver product (pictured is a branch in Brisbane) Interest rates since May have already climbed by 300 basis points with all the major banks expecting more pain in early 2023. As recently as Easter, when the RBA cash rate was still at a record-low of 0.1 per cent, a Commonwealth Bank variable rate stood at just 2.29 per cent for a borrower with a 20 per cent deposit. RateCity research director Sally Tindall, said savers now had more options That has now risen to 5.04 per cent, which means a borrower with an average $600,000 mortgage has seen their monthly repayments surge by a whopping 40 per cent, or $930, to $3,236 from $2,306 in just eight months. Savings Higher inflation means better bank savings rates. A RateCity analysis showed Judo Bank had the highest term deposit rate of 4.95 per cent per annum for those who left their funds untouched for five years. Virgin Money Boost Saver offers a 4.6 per cent rate for balances of up to $250,000 on the proviso savers deposit $2,000 a month into a linked transaction account, make five or more transactions on the linked account and provide 32 days' notice to access funds. For savers aged 14 to 35, Bank of Queensland offered the best rate of 4.75 per cent on its Future Saver product. RateCity research director Sally Tindall, said savers now had more options. 'It's showtime for savers looking to maximise their cash, as banks fight it out for their business,' she said. 'Savers should be aiming for an ongoing rate that's well clear of the cash rate at an absolute minimum. If not, they're getting fleeced.' Where there is cost of living pain, there is also hope. 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