2022 Property Forecast: Grow or Slow?


2022 Property Forecast: Grow or Slow?

National housing values grew 22.1% in 2021, and there are two capital cities and one region in particular that are not ready to slow down just yet. Can you guess where?

The most recent data from CoreLogic reveals there’s a two-speed housing situation emerging across Australia, with prices in Sydney (+0.3%), Melbourne (-0.1%) and Perth (+0.4%) slowing down in December.

On the other hand, Brisbane (+2.9%), Adelaide (+2.6%) and regional Queensland (+2.4%) are set to defy 2022 slowdowns, with CoreLogic saying there’s “no evidence of their growth slowing just yet”. In fact, the monthly rate of growth for each of these regions reached a new cyclical high in December.

“In Brisbane and Adelaide, housing affordability is less challenging, advertised stock levels remain remarkably low and demographic trends continue to support housing demand,” explains CoreLogic’s Research Director Tim Lawless.

Hobart (+1%), Canberra (+0.9%), and Darwin (+0.6%) meanwhile performed smack bang in the middle of the pack in December.

What’s causing the slowing trend in some markets?

The annual housing value gains in the nation’s two biggest cities, Sydney (+25.3%) and Melbourne (+15.1%), were stellar in 2021.

But momentum has slowed sharply, with both cities recording their softest monthly reading since October 2020.

The slowing trend can partly be explained by a bigger deposit hurdle caused by higher housing prices alongside low-income growth, says Mr Lawless, as well as negative interstate migration.

“A surge in freshly advertised listings through December has (also) been a key factor in taking some heat out of the Melbourne and Sydney housing markets,” adds Mr Lawless.

Slower conditions across the Perth housing market, meanwhile, may be more attributable to the disruption to interstate migration caused by extended closed state borders.

“This has had a negative impact on housing demand,” adds Mr Lawless.

What to expect in 2022

For starters, housing stock is very low across regional Australia in particular, with advertised stock levels finishing the year 35.9% below the five-year average.

This compares to combined capital cities seeing stock 14.2% below the five-year average.

“It is likely regional markets, especially those with lifestyle appeal, will continue to benefit from higher demand as remote working policies are more normalised, and demand for holiday homes remains strong amid continued international border restrictions,” says Mr Lawless.

“However, as interest rates begin to bottom out, and affordability constraints extend to regional markets, these housing markets may also move into a downswing phase over the course of 2022.”

And while sellers held the upper hand at the negotiation table in 2021, buyers are expected to regain some leverage in 2022.

That’s because the average time properties spend on the market is beginning to increase, while auction clearance rates are trending down.

Need help navigating your 2022 property purchase?

The juxtaposition of higher housing values against low-income growth has resulted in higher barriers to entry.

Mixed market performance across Australia can also be tricky to navigate, particularly if you’re fairly new to the property game.

“In this current market, it’s important to educate yourself,” says Daran Thomson, Managing Director of Hallmark Consulting. “Find out what your borrowing capacity is; ensure you can fund transactional funds such as stamp duty; understand how the property you’ve chosen will enable you to meet your financial ambitions long-term.”

“No one expects you to do all of this on your own. In fact, it’s a wise move to engage financial and industry experts to support you,” he says. “Hallmark Consulting can connect you with all the right people…trusted and proven partners within our network Australia wide.”

So if you’d like to invest in property this year, and want to do it right – reach out to the Hallmark Consulting team today on 1300 135 295. We’d love to help you map out an action plan.