With the economy taking a brutal beating this year, many Australians have been sitting cautiously watching and waiting to see what the impact will be on the property market before making any big moves.
How will the market respond in terms of property prices and buyer appetite as many households navigate changes in their personal circumstances at the mercy of the pandemic?
I know many of you are thinking that if this year has taught us anything it is that you almost need a crystal ball to predict the future, but based on years in the game and some pretty solid market indicators, here are the trends I think we need to watch out for, and some tips to help you navigate the market in 2022.
1. APRA announcement will affect first home buyers the most.
This year’s APRA announcement will continue to see a sharp decrease for first home buyers, with the market being ‘out of reach’ for them.
ABS data shows that the number of new loan commitments for first home buyers fell in September 2021 for the eighth consecutive month.
As a result, they are now down 27.1 per cent, compared to the same time last year.
Interestingly, the data shows that at the same time as this happened, investor loans rose 83.2 per cent.
Those first home buyers that are able to get into the market will have to turn back to apartments (for example: Strata instead of Torrens titled).
Otherwise, they risk renting for the longer term as the disparity between apartment and house price increases have been significant.
2. On top of APRA, banks will also be tightening the reins on their own accord.
Serviceability expectations will be tightened and reigned in to counter the rising risks in home lending.
This also weighs on the responsibility of the mortgage brokers to gently guide their clients in the right direction regarding their borrowing capacity, that relates to the banking rules and guidelines.
3. Return of student and skilled labour immigration will see more apartments sold and rented in the inner city again.
Vacant apartments targeted to this market, that have been sitting idle during the pandemic, will now be snapped up again as we see the return of overseas students.
As we see the population increase again, we will see more buzz around the apartment market, specifically in university areas.
Likewise, as we see the rise in skilled labour immigration, the general property choices are also likely to be apartments with easy access to transport, schooling and general amenities.
Affordability certainly plays a factor in this, as well as a typically higher level of acceptance for apartment living from overseas immigrants.
3. Expats will continue to buy up big and return home.
I predicted this one last year and it still rings true for 2022.
Except; 2022 will have less uncertainty and we will see even more expats return home, particularly as they are more comfortable with virtual buying.
4. SYDNEY TREND ONLY: The rise of new Sydney hotspots.
Bexley, Belmore and Arncliffe have grown exponentially over the past year (more than 30 per cent growth).
I predict these will continue to be just some of the Sydney hotspots in 2022.
A contributing factor in the shift is that people are being pushed out of the Inner West due to higher price points.
Funky young couples and families will buy up big in these new hotspot areas.
They are great areas for starter homes due to relatively good affordability.
Another win-win is that with the upgrade of the metro line, the commute to the City will be around 20 minutes shorter.
5. Further increase in supply will thin out the buyer pool.
As vendors look to capitalise on the huge amount of growth over the past 18 months, more listings will mean more choice for buyers and a relatively slower incline in further price rises.
Buyers will be able to be much more discerning, and not jump into the wrong property too quickly without doing their due diligence.
Also, people won’t buy into the FOMO (fear of missing out) hype in 2022.
We will be better at doing our due diligence and not racing into decisions with the fear of missing out.
There is a slice of the pie for everyone, but we have to be extremely cautious and patient.
This isn’t a pair of shoes you’re buying!
6. People with the bigger cash reserves will continue to win in this market.
The less dependent you are on borrowing the better off you are.
This is a no-brainer but will really ring true in terms of winners in 2022.
Earlier this year, it was reported that around 60 per cent of first home buyers receive help from their parents and that the average contribution was $90,000.
This actually made ‘mum and dad’ Australia’s ninth-largest mortgage lender, just behind Suncorp Bank.
7. SYDNEY TREND ONLY: The new Western Sydney Airport is a good news story from a buyer’s perspective.
A lot of development around the new airport and other areas of new development in general, will mean more affordable properties.
More supply will keep prices down, so people will have more options to consider, including moving out further from the Inner city suburbs.
8. Virtual buying, while not a new concept, will increase because of expats, immigration and sea and tree changers.
In 2020/21 we saw a sharp decline in auction results because people were really hesitant to buy online or virtually.
Now that we have had time to adjust to the concept and this new normal, we will see an increase in virtual buying and online bidding, and people being more comfortable to do so.
As mentioned, virtual buying isn’t a new concept. It’s only been accelerated by the pandemic. It certainly won’t replace in-person auctions and inspections, but will be an added bonus.
With the proliferation of video, proptech and fintech platforms like Zoom, WhatsApp, AuctionNow, FaceTime, Google Meet, DocuSign, PEXA, SignNow and Macquarie Auction DEFT Pay, there are now so many apps out there to facilitate ease of communication, which in turn have helped us buy ‘virtually’ with ease.
