While forecasting exactly what 2022 holds for property prices is nearly impossible, the past two years provide a good insight into market trends. However, with some significant changes to interest rates, border restrictions and buyer priorities, 2022 will be a whole new year for the Sydney market.
Spotlight: Sydney House prices
We’re predicting that Sydney house prices will only continue to rise in 2022. A new report by Finder estimates an average 8 per cent increase in Sydney house prices. This would add another $102,000 to the median house price, taking us to a staggering $1.37 million.
Interest rates are expected to remain low and steady going into 2022 in line with the Reserve Bank of Australia’s (RBA) recent decision to keep the cash rate at 0.1 per cent. And while we need to watch out for the RBA’s decisions regarding inflation increases next year, Australians can continue to borrow for cheap in 2022.
However, these low-interest rates are having some interesting side effects. While borrowing has increased, so have property prices. Prices are around 20-30% higher than the beginning of this cycle, and yet wage growth hasn’t increased. This means the average home buyer may struggle to pay more for their home, constraining certain buyers into 2022.
However, overall, our low mortgage rates mean the property market will only continue to grow throughout next year.
The pandemic has made many people reevaluate their priorities, and these newfound wants and needs will continue to increase demand for certain properties in 2022.
For some, the additional time at home has made buyers realise they need a little more space or are in need of a change of pace. In the almost two years since the beginning of the pandemic, regional property markets have seen a dramatic increase. In fact, regional markets have been outperforming metropolitan markets in almost every state and territory. The incredible 47% price boom that Byron Bay experienced in 2021 is expected to hit in other seaside communities next year. The lure of the seaside and country lifestyle isn’t going away anytime soon so Sydney waterside is likely to be hot property in the coming months.
On the other hand, work-life balance priorities mean some buyers will be searching for a new ‘livable’ location – within walking distance to work, eat and play. They will be looking for a prime location with shopping, community amenities, education and employment all within 20 minutes from home. These buyers will pay a premium for the right place, good news for our sellers.
International Visitors return
Re-opening Australia’s border will potentially have the biggest impact on the property market in 2022. Opening up means we can begin welcoming back workers, students, tourists and investors. This will most likely renew confidence in certain sectors that have felt the worst of the lockdowns and closures. This includes inner-city apartment towers and student accommodation which should begin to bounce back once students and visitors return to our shores.
Overseas investors have been locked out for almost two years, and with incredibly low – interest rates, they will be fighting to re-enter the market. These changes may also shift the balance between first-home buyers and investors, adding to the challenges first-home buyers have been experiencing over the past few years.
Two-tier property market
These new priorities and general demand fluctuations are creating a two-tier property market – a separation between inner city and outer suburb markets.
We can expect increasing demand for inner and middle-ring suburbs of Sydney as those wanting a ‘liveable’ location, students and visitors flock back to the city. In contrast, this may mean a drop in more affordable outer city locations as the preference swings towards regional alternatives.
There is also a good percentage of buyers and sellers that have been waiting out the pandemic for the past few years, and will still wait into 2022. This delay may cause a small shortage in available properties and decrease list times further as there are only so many sellers and buyers out there.
An interesting prediction for 2022 is that land packages will continue to grow in popularity. As affordability worsens and owning a home moves out of reach for some, purchasing land is the new alternative. Land, generally on the outskirts of cities, gives first-time buyers entry into the market and a chance to start their property journey. Similarly, home packages are also gaining popularity as turnkey and off-the-plan homes usually mean no unexpected costs and locked-in prices to beat rising costs. Government incentives also helped these sorts of property purchases soar last year. We expect these two trends to keep rising throughout next year.
All of these factors mean 2022 will be an interesting year for all of us. Although we don’t know exactly what the next 12 months will bring, you can count on Mattblak to support you in making the right decision in 2022.
If you’ve tackled the above, you should be on your way to getting your property ready for sale.