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.