2021 was the year that everyone will remember as the Covid-19 rampaged people’s lives. Regarding the Australian Real estate market, not only did it remain unaffected by the pandemic and the frequent lockdowns, but also there was a surge in property prices, and it was one for the history books.
The numbers give an excellent view to support the above statement. The prices of Dwellings spiked as much as 22.2 per cent nationally. This was also a record with the previous notable spike in 1989. Furthermore, house prices are at their peaks in regions like Sydney and Melbourne. Sydney saw an increase of 25.8 per cent while Melbourne reported a 16.3 per cent upturn.
Even during the pandemic, these numbers can be due to all-time low mortgage rates, shifting workplace dynamics, government stimulus, or relatively low listings of real estate in the market.
Moving forward into the year 2022, the ultimate question in everyone’s mind is
“What’s in store for Real Estate Market in 2022?”
Contents
We try to answer this question by making some predictions.
Sustained Price Growth
As the pandemic threat recedes, there is an expectation of strong economic growth with the businesses and consumers riding high on confidence. Although there is a chance of sustained growth, it is not expected to turn heads. This can be due to the probability of another virus outbreak or ARPA tightening the screws on lending or change in interest rates (which are now steadily rising from all-time low levels).
As predicted by ANZ investment consultants, the Sydney dwellings might spike by just 6 per cent in the following 12 months while the magnificent Melbourne real estate market might grow a per cent more than Sydney, i.e., 7 per cent. Overall, the predicted national growth is about 6 per cent. This is less than the year 2021 but still well above when looking at the long-term average performance.
Covid-19 washed out all the plans of real estate buyers looking to buy their dream property and the sellers looking to make a successful sale. The market growth will be steady but not at a fast pace as there will be a smaller number of buyers and sellers in 2022.
The low-interest rates, in hindsight, led to the property prices being hiked 20-30 per cent. This might result in affordability issues for a potential buyer. Grab a real estate investment course to know more about the interest rates.
The Australian Prudential Regulation Authority, a.k.a APRA, might execute macro-prudential controls, which will slow down the real estate market.
Growth in Wage
The Reserve Bank of Australia says it expects much more than an economic recovery. This is based on good labour market figures paving the way to the start of wage growth and higher inflation.
A more robust economy has its pros and cons. The pros are that people will be able to afford a mortgage, but the con is that there will be a hike in rates.
Investment consultants predict easing of border restrictions will raise the migration levels and allow international students and immigrants to come and find work and make Australia their home. The real estate market, particularly apartments, will witness massive demand in and around cities like Melbourne and Sydney, which boasts a high standard of education and a good lifestyle. An excellent real estate investment course will clear all your doubts regarding the mortgage rates and helps you negotiate with the consultant.
Slack in Costs for construction of Residential and Commercial buildings
The real estate developers became more traditional in the total number of properties sitting in DA that are to be approved. Site acquisition since 2021 saw an alarming rise in costs for construction. This ripple effect can be seen as there is a downturn in supply for both rental markets and sale markets. This will heat the already existing price issues in the real estate market. However, all is not lost. An investor can focus on finding houses that need little to no renovation.
To conclude, 2022 is predicted to see rental growth hand-in-hand with capital growth, but not at the same rate as 2021. The national market will cool down, with not all big cities experiencing substantial growth, but we are sure that most, if not all, markets will experience healthy rental growth through 2022 and years to come.