As 2021 draws to a close – you may be wondering what is in store for the property market in 2022? There is lots of speculation in the media, most of it quite positive, and leading property commentator Michael Yardney has identified several property trends he anticipates for 2022; below is a summary.
Values will continue to rise: The main drivers of property price growth revolve around consumer confidence, low interest rates, credit availability, economic growth, and supply/demand factors re: housing availability. It is anticipated that whilst property values will grow at a slower rate than 2021, there will still be an increase.
Quality locations will be star performers: Location, location, location is the well-known real estate mantra, and even if the market slows, there will still be strong demand for highly ‘liveable’ locations, with growth outpacing other locations such as properties further from CBD. Desirable lifestyle locations along the eastern seaboard with good regional services and infrastructure, such as the Sunshine Coast and Gold Coast will continue to experience high demand.
Australian economy will improve: As we emerge from lockdowns, borders open up, and international visitors/students return, expenditure is predicted to give the economy a much needed boost, as we consume more and save less. It is estimated that around $200 billion was taken out of the economy from the lockdowns alone, as people were limited in what they could spend on – savings increased and consumption decreased. People will start spending again.
Interest rates – the ‘official’ cash rate will remain unchanged: Michael predicts that the official RBA interest rate is likely to remain unchanged throughout 2022; as the economy will still be operating below its potential and wage growth is still slow. Current interest rates are at stimulatory levels and the Reserve Bank will only raise interest rates once these low rates have done their job and once the economy is bounding along and wages growth has remained strong for some time.
Currently, the positive signs of jobs creation, falling unemployment, and rises in full-time employment are being offset by slow wages growth; and if 200,000+ more skilled immigrants arrive in Australia as planned by the government, this will help fill the job vacancies and dampen wages growth.
More property investors will return to the market: So far this property cycle has been driven by owner-occupiers and first home buyers, but now more and more investors are getting in the market. This always happens after a period of strong housing price growth when a whole new generation of investors learns how well others have done by owning property.