By Nicola McDougall, The Female Investor
The Sydney property market took off like a rocket this year, with its median house price reaching an eye-watering $1.36 million by year’s end.
Unsurprisingly, affordability concerns are starting to have an impact on market conditions, with listings also on the rise, adding to supply. So, after an absolute scorcher of a property year, what do property investment experts expect to happen in the Harbour City next year?
Grant Foley, Buyers’ Agent & QPIA at Grant Foley Property, expects the market to moderate, but there will still be robust demand from buyers.
“I expect demand will continue to exceed supply in most markets in 2022, leading to continued price growth. That said, markets will be more balanced than in 2021, leading to lower levels of capital growth than we’ve experienced this year,” Mr Foley said.
“Sydney growth levels will likely cool to around five per cent, while key regional NSW markets will run a little harder delivering five to 10 per cent growth.
“As Sydney growth slows, A-Grade properties will continue to achieve strong numbers, while B- and C-Grade properties won’t achieve the record prices they did in 2021. Buyers will simply have more choice in 2022, so will become more selective.”
Ben Plohl, Founder & Principal at BFP Property Buyers, said some key market drivers were set to influence the Sydney market next year.
“The big unknown is when will the overseas migrant tap be turned on and what will happen with interest rates,” Mr Plohl said.
“I feel these two factors are going to have an impact on the direction of the market in 2022. However, it is still too early to tell which way either of these important fundamentals will go at this stage.”
He said downsizing baby boomers were likely to also play a big part in the 2022 market.
“We’ve seen a significant increase in demand from buyers looking to downsize to a smaller home and this trend is set to continue, which is anecdotal insights based on the trend of enquiry for our services,” he said.
Rich Harvey, CEO & Founder of Property Buyer, said the price of credit as well as its availability, plus consumer sentiment more broadly, were set to influence the market next year.
“If APRA steps in and crimps investor lending too harshly, then we could see a dramatic pull back in property demand. An exodus of investors from the market would see rental prices skyrocket as we are simply not building enough properties to satisfy future demand,” Mr Harvey said.
Another other major factor to watch is migration numbers, he said.
“We are likely to see a resumption of full international border re-openings, which will bring a flood of 200,000 migrants to fill the gap in job vacancies. Higher migration levels will then place strong pressure on property prices and rental demand in our markets, which are still undersupplied in most areas,” Mr Harvey said.
Nick Viner, Principal at Buyer’s Domain, said the pandemic was also likely to leave a lasting impact on the way real estate is bought and sold.
“Virtual buying will continue to be a trend with the use of online auctions, for example, prevailing beyond lockdowns,” Mr Viner said.
“Virtual buying is not a new concept but is one that has been accelerated by the pandemic and with the ease of communication and other tech systems such as Zoom, Whatsapp, Microsoft Teams, DocuSign and others, buyers will continue to gravitate towards the convenience of “online buying”, even if they are currently living in the same suburb!”
The sharp uptick in the number of people working from home is also set to have a lasting impact on the types of properties people want to buy, he said.
“The long-term impacts of this are greater requirements from buyers for additional space, along with technological improvements to houses that will continue to be the most in demand. Some areas with limited access to amenities and poor network coverage will fare badly as a result,” Mr Viner said.
