After a bumper year for real estate, there’s a lot of talk about what the property market will do in 2022. Bricks & Mortar Media spoke with 15 of their real estate clients, looking at what’s ahead for property in 2022. Here is an overview what those agents had to say.
Peter Koulizos – Chairman of Property Investment Professionals of Australia (PIPA)
Peter Koulizos expects property price growth will moderate in 2022, with the current frenzy unsustainable for another 12 months.
“Property prices will still increase in the vast majority of areas, but most won’t see dwelling price rises of more than 10 per cent,” Mr Koulizos said.
He puts that softening down to a number of reasons, including increased property supply, further lending restrictions, and higher interest rates from the banks.
Meanwhile, Mr Koulizos tips the moderate rise in prices will be driven by a shifting population, as more and more people embrace a work from home trend that’s set to stay.
While Mr Koulizos expects residential property to maintain its solid performance, he did express concern for the CBD office and retail markets.
“WFH (work from home) and online shopping will continue to have a negative impact on these two sectors,” he said.
“Landlords of office and retail property will have to be prepared to refit and repurpose space if they want to collect reasonable rents and stop vacancy rates increasing significantly.”
Mike Mortlock – Managing Director, MCG Quantity Surveyors
Mike Mortlock agreed the frenetic activity of the current property market will abate in 2022.
“A lot depends on macroprudential policies, but with affordability constraints and listings increasing, a slowdown seems obvious,” he said.
However, he noted various areas will fare differently.
“Brisbane seems to be one example where it looks to be having a second wind. I’d expect demand to stay quite high for most of 2022 in Brisbane, with SEQ likely looking the pick of areas across the country.”
In terms of the market segments to watch in 2022, Mr Mortlock believes houses will continue to outperform units.
“The commercial property sector will also be one to watch with high demand for solid yielding assets given interest rates at present,” he tipped.
Meanwhile, he noted the CBD office market could prove interesting in 2022.
“The mass exodus to the regions will also be interesting to watch as we discover whether the CBD office complexes buzz with activity or languish while employees favour working from home with more room to move,” he said.
Kate Hill – Property buyer, Advisable
Like other experts, Kate Hill tipped the increase in property prices will slow in 2022.
However, she noted the new Omricon strain of Coronavirus could shift the landscape.
“With Omicron on the horizon and among us, people will still be nervous about travelling for the next few months until we know what we’re dealing with,” she said.
“People will still have money to spend, and property seems to be a favourite place to put it.”
Even if things did slow, Ms Hill said she didn’t not expect there to be a price crash.
“It is likely to be more of an evening out rather than a freefall, which will be the case across the country. “
Meanwhile, Ms Hill noted there could be a divergence in the market moving forward.
“This past year has been unusual with most markets – metro and regional – experiencing booming conditions,” she said.
“Anywhere that has good jobs, strong economy, lifestyle options and affordable housing is set to experience robust market conditions next year.
“Within cities, it will also be the middle- to outer-ring suburbs that will continue to perform, due to affordability reasons.”
Lachlan Vidler – Director Atlas Property Group
Lachlan Vidler said he predicted the important sectors to watch in 2022 included the new housing sector, “affordable” capital city markets, and well-located regional markets, while moderate price gains would continue across the country.
“It’s no secret that Australia has a critical housing shortage, and the supply chain impacts of COVID-19 have further exacerbated this situation,” Mr Vidler reflected.
“Some building supplies have risen by as much as 50 per cent and completion timeframes continue to blow out – further reducing supply in high demand locations.
“The more affordable capital city markets should continue to prove as strong performers in 2022.
“While the median price in Sydney is now well over $1 million, markets such as Brisbane and Adelaide have median prices hovering around the high $600,000s to low $700,000s and continue to present themselves as attractive opportunities.
“Finally, regional markets have been the strongest performers over 2021. This is expected to continue, particularly for those markets within a few hours of a capital city.”
Richard Crabb – Founder & Managing Director, ASPIRE Advisor Network
Richard Crabb noted a lot of property owners have enjoyed the massive growth curve of 2021 and will be looking to cash in, which will increase the supply next year.
“As prices stabilise and supply increases, we will see the return of the investor as many rental markets will remain tight, producing good yield and low vacancy,” he said.
Meanwhile, Mr Crabb said Christmas could see the trend of “relocation tourism” where people will be checking out what could be their new neighbourhood.
“I think we will see the major destinations of this migration will be Ballina through to Noosa along the NSW/Queensland coastline.”
He also said he expected a little steam to come out of the general market next year.
“As supply increases, buyers will have more choice and less time pressure,” he said.
“Demand will still be present for quality and well-priced property, but this will be more mature and manageable than the frenzied action of 2021.”
Kevin Brogan – Director of Valuation Policy and Compliance, Herron Todd White
Kevin Brogan said the performance of the residential property market in 2022 will depend on the interplay of a number of key influences.
“Historically low interest rates have been one of the main drivers for the very strong market conditions that we are currently experiencing,” he said.
“If interest rates remain low in 2022, this will continue to maintain strong demand.”
However, he noted there is increased supply, which could serve to moderate price growth in 2022.
He also said affordability and increased lending criteria are likely to affect first time buyers and lower- to mid-range income households moving forward.
As for trends to watch in 2022, Mr Brogan also flags new home construction.
“Construction costs have been escalating significantly due to a combination of supply chain issues, skilled labour shortages and the high level of demand for new residential property,” he said.
“Builders who have entered into fixed price building contracts are now seeing margins squeezed or even extinguished and it is inevitable that some will not survive.
“The rapid increase in property values in many markets is maintaining the viability of new home construction, but if construction costs rise faster than residential property values this may change.”
Ben Kingsley – Chairman, Property Investors Council of Australia (PICA)
Ben Kinsgley also believes the unified property price growth story of 2021 will be replaced by a more divergent market in 2022.
Rather than all markets ‘firing’, he predicted the landscape will shift back to “the markets within markets story with some markets representing better value than others”.
He noted if the economic recovery continues, he expected to see more markets in positive rather than negative growth territory in 2022.
“With selling supply increasing in our major centres of Sydney and Melbourne, the story might be more about A, B and C class properties and buyer interest in these assets,” he said.
“Usually, in a turning or softening market, A class assets sell well, but the vendor sale price expectations of B and C class asset might need to be adjusted.
“Also, I see vacancy rates tightening over 2022 putting upward pressure on rents, assuming international migration returns.”
Grant Foley – Buyer’s agent, Grant Foley Property
Grant Foley tipped property demand and supply would be more balanced in 2022, and most markets will see moderate price growth.
He said Sydney’s growth level will likely slow, resulting in A-Grade properties continuing to achieve strong numbers, while B- and C-Grade properties won’t achieve the record prices they did in 2021.
Regional areas will “run a little harder”, he tipped, delivering growth between 5 and 10 per cent.
Meanwhile, he said Brisbane still has fuel in the tank.
“Greater Brisbane has enormous momentum and is experiencing a much-awaited cyclical price boom.
“With significant runway still existing for growth, I expect prices to rise by a further 10 to 15 per cent in 2022, fuelled by not only strong local sentiment, but also continued interstate migration and investor activity.”
Nick Viner – Principal, Buyer’s Domain
Nick Viner said he believed the start of 2022 would be strong, with vendors less reluctant to bring their homes to market.
That said, he believes buyers will also return in strong numbers at the start of 2022, only to discover that there is less stock than they hoped for, and this will lead to strengthening prices once again.
After the first quarter, Mr Viner tipped this price growth would drop off in the lead-up to the federal election, and due to the threat of rising interest rates.
In terms of trends to watch in 2022, Mr Viner said the return of student and skilled labour to the cities would result greater demand for apartments, both from a sales and leasing perspective in the inner-city.
Ben Plohl – Founder and Principal, BFP Property Buyers
Based in Sydney, Ben Plohl predicted his local market will have little to no growth in 2022.
“During the back end of 2021, in my target market of The Hills District, we have seen an increase in stock and a decrease in demand,” he said.
“I sense there is a lot of buyer fatigue in the market and vendors expectations on price is also being challenged.
“Next year will see demand taper off amidst the macrotopics of increasing interest rates and increasing household spending due to inflationary pressures.”
He noted next year downsizing Baby Boomers would play an important role in market conditions.
“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,” Mr Plohl said.
Rich Harvey – CEO & Founder, Property Buyer
As someone who operates in Sydney, Melbourne and Brisbane, Rich Harvey said he expected to see positive growth until interest rates actually start to rise.
“Looking ahead in 2022, I see the property market continuing to grow but at a much slower rate. Peak growth is now behind us and the frenetic intensity of 2021 will dissipate,” he said.
“But remember, there is not one property market – there are over 15,000 suburbs in Australia and each suburb, city and region is driven by many important local factors.”
In terms of what markets will perform best, Mr Harvey tipped high quality premium (A-grade) property will continue to be in strong demand and prices will remain resilient – particularly in the prestige sector where there is always an ongoing lack of supply.
“In the middle price segments ($1 million to $3 million) we should see a significant rise in the volume of listings, which will give upgraders and homebuyers much greater choice for transitioning into their next home,” he said.
“Lower grade properties on busy roads, next to industrial parks or located in inferior areas will struggle to achieve meaningful price growth in 2022.
“Investors will continue to seek positive cash flow assets and areas with strong future uplift.”
Adam Empringham – Director of Sales, Image Property
Queensland agent Adam Empringham said he is starting to see the markets soften a little bit, as far as the level of intensity that was there previously.
But now the Queensland border has opened, he expects interest to spike again.
“Now that they can physically check it out and get their holidays out of the way and those sorts of thing, we’ll see some intensity there,” he said.
Mr Empringham said he expects that will see Brisbane enjoy strong growth throughout 2022, but not as dramatic as it has been of late.
On the Sunshine Coast, however, he predicts strong price increases will continue.
“It’s still got a lot of legs in that market due to a number of contributing factors. It’s the standout from a growth perspective. The Gold Coast will perform similar to Brisbane.”
Driving that will be the return of overseas students, and international migration, he predicted.
Melinda Jennison – Managing Director, Streamline Property Buyers
Based in Queensland, Melinda Jennison also predicted Brisbane will remain strong in 2022.
That will largely be due to the border reopening and people looking to relocate, and she tipped the rental market will also be affected, with a tightening vacancy rate.
“At some stage we do expect that the rate of growth in Brisbane will start to slow, and this is likely to occur at some stage throughout 2022, perhaps once house prices increase to a level where affordability constraints become an issue,” she said.
Billy Mitchell – Principal, Century 21 Platinum Agents and Century 21 Lifestyle Caloundra
From his base on the Sunshine Coast, Billy Mitchell noted the local market has seen incredible growth in 2021.
He predicts there could be further growth of between 8 to 10 per cent growth in the next 12 months as well.
Mr Mitchell said the 2032 Brisbane Olympics could also play a role in the appeal of the Sunshine state.
“There is ongoing extensive infrastructure development happening in the region and the 2032 Olympics shining a spotlight on south east Queensland which is an indication to future growth.”
Justin Nickerson – Director, Apollo Auctions
Looking back on 2021, Justin Nickerson said it has probably been the best south east Queensland auction market the region has seen.
“The Brisbane property market is still performing well, with strong auction clearance rates, and I anticipate this to continue next year,” Mr Nickerson said.
He noted next year the main thing that would facilitate any softening of the market is increased supply.
“The other potential blockage to the market is that sellers just continue to get carried away with what they expect for their property, which has been happening more and more at auctions of late,” he said.
However, Mr Nickerson noted the opening of the borders could also have an impact moving forward and it could go one of two ways.
“Two schools of thought are more people are going to come up and look at properties and buy them.
“The other school of thought is that the migration was more popular when people were locked down, and to use their words ‘oppressed’, and couldn’t go to the coffee shop to even get a coffee.
“Which one of those two will play out will be a fascinating thing to watch.”
