Property trends and predictions for 2022

As the year ends, markets nationally have reopened and rebounded from another tumultuous 12 months. But, with new variants reaching our shores and whispers of an interest rate rise on the horizon, are there more challenges yet to come?

What the last 12 months have told us is that the pandemic has done little to slow the property market. Instead, markets across the nation have boomed.

Even our most locked down city, Melbourne, hasn’t been immune from rapidly increasing house prices, with dwelling values jumping up 16.3% in the 12 months to 30 November (Corelogic).

Brisbane not only was a popular destination for those looking for warmer climates and a lifestyle change. It also won its bid for the 2032 Olympic Games. These shifts pushed already rising prices north across the state. Over the last 12 months Brisbane saw an increase of 25.1%.

The harbour-city of Sydney outdid all other markets with a 25.8% rise in the 12 months to November, despite enduring lengthy lockdowns in the second half of the year.

Median house prices in Sydney and Melbourne are now at eye-watering levels, and the median capital city price nationwide is also closing in on seven figures.

Perth dwelling values have surged by 14.5% in the past year, according to data by CoreLogic.

Adelaide, which boasts the title of Australia’s most liveable city and third in the world, has seen dwelling values increase by 21.4%.

For the year ahead, we know that inflation is coming. We are already seeing increases in the cost of building materials, production, and the limited skilled trades available. This is obviously impacting the building and construction industry. The cost of living is rising across the nation, and as our workforce adapts to the new normal, wages must also inevitably rise to meet them.

We also know that interest rate increases will occur, with predictions of the first cash rate rise in late 2022 or early 2023. And there will be a federal election in the second quarter of 2022, which will result in lower sales volumes over the first half of the year.

The election will also bring new focus to the already hotly contested subject of the rental and housing affordability crisis, and predictions are that the increase of land release across the country will be high on the agenda, however this is unlikely to meet demand due to red tape. While all this may seem like more challenges to overcome, plenty of opportunities also lie ahead.

As migration returns, potentially 2 million people will enter the country over the next five years. This will bring skilled workers back to many sectors and the influx of renters and purchasers returning to the market will see an 8% capital growth in 2022, according to Corelogic.

Another positive is that unemployment is at pre-pandemic levels. The Australian labour market is set for a strong recovery, with payroll jobs already rebounding and job advertisements surging.

The latest Westpac Melbourne Institute Unemployment Expectations Index shows Australians are more confident about their job prospects, with a fall of 11% in unemployment – the lowest level in nearly three decades.

Economic growth is also increasing, with a forecasted increase of 5.5% in 2022 and wage growth is predicted to hit 10-year highs by 2023.

While for purchasers, affordability will be key in 2022 and 2023, the rental affordability crisis will lead to continued rental growth for investors.

While there are challenges to overcome in the year ahead, there is also plenty to benefit from if you are entering the market in the new year. Let the experienced team at Ironfish support you in your property goals in 2022.

Want to know more? Read our comprehensive analysis of the coming trends. Download our 2022 Guide to the Property Market.