What is the Property Market Trend For 2022?

What is the Property Market Trend For 2022?

Posted on March 21, 2022 by Mirren Property Investment

Last year, the property market had values increasing in around 98% of locations all over Australia. Many rose by over 20%. This is somewhat unusual.

This 2022, we’ll be experiencing more “normal” property values- they will be very segmented. This means that some property values will continue to increase enormously, others will increase moderately, some locations will have affordability issues, and a few areas will experience a dip in their property values.

Varying Affordability Levels Between Capitals

Property values jumped over 20% last year despite wages having hardly increased at all. This constrains property price growth in Melbourne and Sydney as lending capacity has been maximized.

The smaller capitals, especially Brisbane and Adelaide, continue to offer affordable property prices.

In Sydney, the median house price is twice that of Brisbane. Sydney’s median house price is also much higher than that of Melbourne.

Data gathered throughout February favours a sellers’ market

Despite mixed results throughout the past month, buyer and seller activity was strong.

Price growth in Sydney and Melbourne has been moderate. On the other hand, Brisbane and Adelaide showed strong growth in asking prices.

Will the Ukrainian Crisis Affect the Property Market?

In recent headlines, it is suggested that the Russian invasion of Ukraine will cause property prices to dive by about 15%.

However, the history of the past 35 years says differently. Despite significant economic, military, and terrorist crises, the Australian economy has always performed exceptionally well.

This headline has failed to recognize the strength of the Australian economy, the flood of migrants that the Ukrainian crisis will produce, and the resilience of the Australian housing market and its banking system.

War overseas may cause short-term falls of confidence. However, once economic growth resumes and political tensions ease, there will be a quick bounce back for local housing values.

Where is the Housing Market Headed in 2022?

Despite highly fragmented price growth and generally lower growth rates, demand for housing will continue to stay strong.

Growth in the housing market is likely to increase by 4% in Melbourne and 5% in Sydney. More substantial growth is expected in the smaller capitals of Brisbane and Adelaide.

This year, rental costs will experience a solid increase due to low vacancy rates and increasing demand for rental properties.

Housing market demand will increase as the country re-opens its borders, mass migration occurs, and the economy recovers in a post-COVID world. This increase will also show an underlying shortage of housing.

Investor activity will continue to support housing markets. Price growth levels will also be determined by income growth and interest rates. However, the housing market will likely stay steady as we continue moving forward.

Dwelling Approvals

The Australian Bureau of Statistics released Building Approval figures and the statistics showed that the dwelling approvals for new properties and homes recovered and returned to their levels before the pandemic hit.

Recent Severe Weather Events

Some markets, particularly in South East Queensland, Wide Bay-Burnett, and parts of New South Wales, will experience a dip in the housing and property market due to flooding.

However, the market is likely to recover within a year, even in the hardest-hit areas. Historically, this is supported by the quick recovery we saw in the property market after the flooding that occurred in 2011.

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