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HomeNewsAfter the “madness” of last year, how will markets perform in 2022?

After the “madness” of last year, how will markets perform in 2022?


By Nicola McDougall, The Female Investor

The New Year is here, and all eyes are on what property markets might do in coming months.

In the final month or two of last year, market conditions started to diverge in many parts of the country, generally due to affordability considerations as well as many buyers simply running out of puff… and possibly out of money.

Australia usually has different market conditions in most locations depending on the economic vibrancy of the local area, as well as many other important factors including supply and demand.

But last year, it was like we had our very own “tulip fever”, which sometimes did resemble the “madness of the crowds” with property price growth up of to 50 per cent recorded in some suburbs – in just one year.

Most capital cities and major regional areas recorded double digit price growth and hit new record highs month after month after month. It was fascinating to watch – if not so enjoyable to be involved with at the coalface.

So, what do the experts believe will happen with national markets this year? Let’s find out, shall we?

Kate Hill, Property Buyer at Adviseable and Co-Author of The Female Investor said even though property prices were starting to slow at the end of last year she preferred to adopt a “wait and see approach” when it came to the economy in particular.

“It’ll come down to the general mood and ‘consumer sentiment’ out there, and what is actually happening on the ground,” she said.

“With Omicron among us, people will still be nervous about travelling for the next few months until we know what we’re dealing with. They will still have money to spend, and property seems to be a favourite place to put it.

“Until listing numbers go up, prices will continue to go up, but listings numbers do appear to be on the increase in many areas.”

Kate Hill
Kate Hill, Property Buyer at Adviseable and Co-Author of The Female Investor

She said while the Australian Prudential Regulation Authority or APRA could play a role this year, depending on how heavy-handed it was with lending restrictions, property prices were unlikely to nose-drive.

“The general consensus is that, even when things do slow down, property prices won’t crash to catastrophic lows as there will still be competition between buyers to buy quality homes in sought-after areas,” Ms Hill said.

“It is likely to be more of an evening-out rather than a freefall, which will be the case across the country.”

Peter Koulizos, Chair of the Property Investment Professionals of Australia or PIPA, said a number of key drives would likely influence market direction this year and slow the rate of acceleration of property prices.

“The supply of houses for sale will increase, as lockdowns have been lifted and restrictions on interstate travel have been eased,” Mr Koulizos said.

“Banks will lift their lending rates and/or assessment rates, which means less people will be able to borrow money to buy property. This is in addition to the RBA lifting or threatening to lift the cash rate in 2022.”

However, a softening of market conditions did not mean that price would not continue to rise this year, he said.

Peter Koulizos, Chair of the Property Investment Professionals of Australia

“On the other hand, property prices and rents will continue to increase, mainly due to the shift in population,” Mr Kouizos said.

“At the local level, we have seen people move from large capital cities to smaller capital cities and many have migrated to lifestyle areas, within commuting distance of a capital city.

This migration will continue as employers realise that working from home is not just a short-term reaction to COVID-19. WFH is here to stay, with many employees in this tight job market demanding the flexibility to work from home, for at least part of the working week.”

Mr Koulizos said there would be additional pressure on some markets when overseas migration restarted at some point in the future, with hundreds of thousands of migrants per year moving to Australia.

“Property prices, and more so rents, have increased significantly without any overseas migrants and international students,” he said.

“What do you think will happen when our international borders open up? Demand for property will increase significantly, initially putting pressure on rents but this will flow onto property prices.”

Mike Mortlock, Managing Director at MCG Quantity Surveyors, believes this year will still be a positive one for property prices – albeit at a more moderate level.

“Whilst I think 2022 will still see growth in positive territory, come December 2022, it won’t be the fever pitch stuff we saw across the whole country in 2021,” Mr Mortlock said.

“A lot depends on macroprudential policies, but with affordability constraints and listings increasing, a slowdown seems obvious.”

He said that certain pockets of the country are set to perform better than others this year and especially Southeast Queensland.

“Certain pockets of the country will fair differently, Brisbane seems to be one example where it looks to be having a second wind,” Mr Mortlock said.

Mike Mortlock, Managing Director at MCG Quantity Surveyors

Lachlan Vidler, Director at Atlas Property Group, said some surprising elements from the past year were set to have a lasting impact on the market.

“The hybrid working model has continued to perform strongly and is allowing people to explore new housing markets. I don’t see any reason why this won’t continue and is perfect for those people seeking a greater work/life balance,” Mr Vidler said.

“Rising interest rates will be an interesting dynamic over the next 12 months and beyond. While we don’t expect large increases, every basis point increase translates to lower borrowing capacity and impacts overall demand in the market.”

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Lachlan Vidler, Director, Atlas Property Group

Nicola McDougall


The Female Investor

Main image: DepositPhoto

Nicola McDougall