A record-breaking year and trends to watch in 2022

Australia has smashed property records in 2021, racking up the highest number of sales and fastest rate of annual house price growth on record, according to new research.

Domain’s End of Year Wrap shows that 446,800 houses and 144,500 units sold this year, with the combined capital city house price quickly closing in on the magic $1 million mark.

It’s the fastest annual rate of house price growth on record at 21.9 per cent. 

The outlook for 2022 is also looking buoyant, with the start to summer unusually strong by historical standards.

The report also showed the combined capital cities’ volume of property sales climbed above the 10-year average by 18 per cent and in regional Australia by 42 per cent. 

The scheduled number of auctions in 2021 was also a record, with 115,600 homes earmarked to go under the hammer.

The quickest sale was a home in Goodwood, in Hobart, which sold in just 8 days, and the biggest sale for the year was the “sky mansion” penthouse apartment on the top three levels of Sydney’s ANZ Tower.

It sold for $60 million.

Domain Chief of Research and Economics Dr Nicola Powell said the 2021 property market would be defined as the year Aussies re-imagined their homes.

“The year is closing in a different position to the start, sellers are re-engaging with the market, increasing supply, which in turn offers greater choice for buyers,” she said.

“New listings are coming to market quicker than they are being sold. While it remains a sellers’ market, slowly market dynamics are changing to provide more favourable conditions for buyers.”

Other key highlights:

  • The time to sell a house was the quickest it has been since 2008 and 2014 for units.
  • The difference between the asking and sold price plummeted to an 18-year low for properties sold by private treaty.
  • The more bedrooms a home has, the greater the annual price growth as buyers pay a premium for space.
  • The quickest sale in NSW was in Killarney Heights at 10 days.
  • The quickest sale in QLD was in Diamond Valley at 10 days.
  • The quickest sale in VIC was in Sassafras at 10 days.
  • The quickest sale in SA was in Regency Park at 11 days.
Source: Domain

The report also revealed the types of homes Aussies were searching for with keyword searches for ‘study’, ‘garage’, ‘balcony’, ‘courtyard’ and ‘garden’ all increasing on

Lifestyle locations also became a focus, as did searches for ‘pool’, ‘beach’ and ‘water’.

“The challenge of grappling with a global pandemic shifted buyer priorities, placing a greater emphasis on the space in which we reside, this spurred purchases and brought forward decisions,” Dr Powell said.

“It has been an impetus for change, driving a social and lifestyle shift, sparking a renaissance in the outer suburbia and accelerating the city drain into regional Australia.”

Source: Domain

Working from home and affordability constraints also sparked a rise in regional living keywords with big increases for ‘rural’, ‘acreage’ and ‘farm’, while affordability constraints prompted a rise in searches for ‘duplex’, ‘dual’ and ‘unit’.

“Analysing keyword searches helps us distinguish between changing trends or fleeting moments of desirability,” Dr Powell said.

“The pandemic has forced us all to use our homes differently as we spent more time than ever in them and perhaps forever made a mark on our purchasing decisions, property wish lists and architectural trends.”

Dr Powell said spring in 2021 had seen high levels of buyer demand and while traditionally there would be an 11 per cent dip across the combined capitals, the start to summer had remained “unusually strong”.

Moving into 2022, Domain’s report suggests the market will start to turn to favour buyers more, with appraisals soaring and strong listing rates.

  1. A tip in buyers favour

Buying opportunities are looking brighter for 2022 with new listings to remain strong, particularly over late summer and early autumn.

“This will continue to bring the total homes for sale into a ‘normal realm’,” Dr Powell said.

“This additional choice, as well as tighter lending reducing buyers’ leverage and wages growth not keeping pace with 2021 price growth, prices won’t rise at the same sweltering pace as in 2021.”

  1. Lending crackdown

APRA has already made its first move to tighten lending criteria and further intervention is possible. Tougher lending would take the heat out of the market and slow price growth by restricting debt or the number of borrowers.

Dr Powell said Domain had conducted an online survey to understand consumer sentiment and in reaction to APRA’s tighter lending, 25 per cent of respondents felt less confident about buying while the vast majority of attitudes were unchanged.

“There was a clear swing between those not on the property ladder, with first home buyers and renters feeling less confident than those who own property,” she said in the report.

  1. Growing investor appetite

Domain tips investors will be a growing market segment unless APRA “puts the brakes on”.

“It remains a landlords’ market across most major cities and into regional Australia,” Dr Powell said.

“Investors have had the benefit of rising rents and equity growth, with prices sent to continue to rise, albeit at a slower pace than 2021.”

Regions that have greater exposure to overseas migration will be susceptible to a tightening rental market as most migrants tend to rent upon arrival. 

The report said inner Melbourne and Sydney’s city and east usually attract high levels of migration and student populations and this “major spark” would see the CBDs repopulate.

  1. ‘Big Australia’ reimagined

The report highlights that population growth is likely to be a government focus in 2022 and beyond, boosted by migration.

“The foundational logic is that creating a ‘Big Australia’ through a big population is a way to sustain higher economic growth and build Australia’s skilled workforce,” Dr Powell said.

“The return of overseas migrants, international students and particularly skilled highly-paid migrants, will add to demand on housing. 

“Australia is also likely to see a continued shift of residents across state borders or into regional markets.”

  1. Finite coastline a reality

Australians will continue to seek coastal locations. House prices in areas such as Somers, Byron Bay and Sunshine Beach soared by 69 per cent, 58 per cent and 48 per cent respectively in the past year. 

“Buyers will be enticed to hone in on coastal areas that are affordable and poised for future growth will drive buyers in 2022,” Dr Powell said.

“Especially if you can find that sweet spot of an extended commutable distance to a major working hub.”

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Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.