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What Will Happen to the Property Market in 2022?

property prices 2022

What Will Happen to the Property Market in 2022?

2021 was an unprecedented year for Australian property prices. The real estate market showed an incredible resilience to pandemic-induced negative sentiment in many other industries. A lot of this was due to Australians returning home from overseas and wanting to purchase property in their home country. Favourable interest rates have also played their part, contributing to 2021 being a ‘hot’ year for real estate in Queensland and around Australia.

What’s the outlook for real estate in 2022 then? Is this incredible run set to continue? Well, as we all know it can be difficult to predict property prices, but the banks and experts around the country are trying to do exactly that.

Growth to Continue

The general consensus that is property price growth will still continue on an upward trajectory, albeit at a much slower pace.  Michael Yardney from Property Update says, “property values will keep rising in 2022, but not everywhere and not to the same extent as they have over the last year.”

This view is supported by the big banks. Commonwealth Bank suggests prices will slow considerably in 2022, before dropping by 10% in 2023. As in most markets, what goes up must come down, and the outlook is that the 21.9% growth in property prices across Australia in 2021 simply cannot go on forever.

Gareth Aird, the CBA head of Australian economics, says that “the phenomenal lift in prices is not over yet, given dwelling prices are still rising briskly in most capital cities. But near-term indicators of momentum, coupled with the recent move higher in fixed-rate mortgages, suggest that conditions will moderate from here.”

The ANZ is also on a similar tangent, although they believe the fall in 2023 will be a much easier to absorb 4%.

Will FOMO Play a Part?

‘Fear of missing out”, or FOMO, contributed heavily to the rise of prices in 2021 according to BuyersBuyers co-founder Michael Wargent. Buyers were scared to miss the boat, which caused the escalating demand for property to further increase.

Will that be as relevant in 2022? Not as much, says BuyersBuyers CEO Doron Peleg. Buyers will be focusing on affordability as they eye out probably mortgage rate increases: “A range of factors combined will help to take the heat out of the housing market in 2022, such as gradually rising mortgage rates, more vendors looking to lock in gains, and more cautious buyers as affordability bites following the strong price gains of 2021.” As a result, he believes more investors will be on the scene in 2022, rather than first home buyers or upgraders.

Interest Rates

Interest rates will be a key turning point to how property prices change over the coming months and years. Remember that at the moment we’re operating from record low-level interest rates, which played a big part in the upward price action of 2021.

What happens with interest rates will determine how strongly 2022 follows in these footsteps. The Reserve Bank of Australia sets official interest rates and are saying they don’t expect to hike them until 2023 or 2024. If they are wrong in this estimation and they’re hiked earlier, it will affect the positive buyer sentiment and have a big impact on price growth in 2022.

Do What’s Right for You

At The Henry Wong Team®, we believe that the right time to sell is normally determined by your own personal situation. Sure, market sentiment plays a part in that. But if it’s time for you to move on in life, then that’s the right time for you to sell. Change and personal growth and progress are important, no matter what the real estate market is doing.

That said, we’re currently enjoying amazing highs in property prices across Brisbane. The market is strong, buyers are plentiful. It’s a good time to be thinking about selling, and if you’re on the southside of Brisbane and want to do that, please get in touch. Henry has been selling real estate here for many years and would love to answer your questions or give you advice.

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