3 Things Buyers Should Know About the Australian Property Market in 2022

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The last two years have hugely impacted the property market. Closed borders meant you couldn’t come to live in Australia, as well as a mass exodus of individuals and families leaving the country. A rise in work-from-anywhere saw city folks uproot and move to less populated places. And the general uncertainty about the pandemic caused many who might’ve wanted to sell or buy to reconsider or delay decisions.

In short, there was a lot of change. Now, in 2022, with the world increasingly returning to what it was pre-pandemic, we’re again seeing a big shift in the property market. Ahead, we share some of what those current and predicted changes are. Though, before we get into them, as is always the case with property forecasts, it’s important to note the limitations.

“The property market is heavily reliant on supply and demand, and that can be notoriously difficult to pick,” says Leanne Pilkington, Chief Executive Officer at real estate network Laing+Simmons.

“The media also have the ability to influence the market depending on the style of stories they choose to push, as do the banks. When the banks tighten lending requirements, it makes it harder to get money and therefore, price growths can stall.”

Pilkington says property experts like herself can get good insight into what’s ahead for the property market based on interest rates, consumer sentiment and economic data. “When interest rates are low, historically, house prices are high and the opposite is also true,” she says.

So, using that insight, here are three things experts say buyers should know about the Australian property market in 2022.

Australian Mortgage Rates Will Continue to Increase

While we’ve already seen mortgage interest rates go up this year, Pilkington says she thinks that trend will continue.

Adds Graham Cooke, head of consumer research at comparison site Finder adds, “[Loan increases] will cost a homeowner on these loans $3,175 extra this year — and that’s before any official cash rate rise.”

Median Houses Prices in Australia Will Stabilise

“Typically, when mortgage rates rise, prices fall, but we are not expecting significant increases in the short term,” says Pilkington. “So, prices should have some stability after a couple of years of incredible growth.”

Domain’s Chief of Research and Economics, Dr Nicola Powell, says the price drop is, in part, due to buyers having more choice, which has diluted the buyer pool and competition between buyers.

“Buyers are a lot more cautious this year,” Dr Powell says. “Firstly, around not compromising — whereas this time last year, buyers were really fearful of missing out on securing a home. That’s gone. Now they’re being able to make much more rational decisions in a better timeframe.”

As for property prices in the city versus regional areas, Pilkington says it’s hard to predict. “The significant number of people moving out of the city to regional locations will be put under pressure as the workforce is increasingly expected to head back to the office,” she says. “Only time will tell if the regional moves are sustainable for everyone in the long term.”

Rental Prices Will Increase

Over the past 12 months, house rents in capital cities had recorded price increases of 14.7% while rental units have risen by 11.2%, The Guardian reported SQM Research had found.

Rental prices for houses in Sydney have gone up 19.1% in the past 12 months, while Melbourne unit rents have jumped by 11.5% and Brisbane houses had been upped 15.2%. Pilkington attributes the rental price jump to borders opening to students and overseas’ arrivals.

She also notes that the influx of students and immigrants might affect unit prices, which, currently, are still not growing at the same rate as houses.