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Hobart to lead national price growth in 2022

Property prices across Australia are expected to rise 6-9 per cent this year, with Hobart leading the charge.

The PropTrack Property Market Outlook 2022 predicts prices in Hobart will climb 9-12 per cent in the next 12 months, building on a stellar 2021, where house prices rose a staggering 34 per cent.

The other cities tipped to perform well this year include Brisbane, with 8-11 per cent growth expected, followed by Adelaide and Canberra at 6-9 per cent.

PropTrack Director Economic Research and report author Cameron Kusher said tight listings and affordability would be key trends in 2022.

“Brisbane and Hobart are expected to see the biggest price growth among the capital cities thanks to their low supply of stock for sale, heightened demand and relatively lower prices compared to Sydney and Melbourne,” Mr Kusher said.

Darwin is tipped to see growth of 5-8 per cent, while Sydney and Melbourne are expected to grow by 4-7 per cent. Perth is again likely to be the lagger with growth of just 3-6 per cent.

Mr Kusher said people leaving the most expensive cities would weigh on price growth.

“Perth along with Sydney and Melbourne have the lowest price growth forecasts for the year,” he said.

“Perth has shown a stronger slowdown in price growth already relative to other capital cities, while the more expensive property prices in Sydney and Melbourne may increasingly see demand move out of those cities and into more affordable housing markets.”

Mr Kusher said he expected potential rate rises and lower borrowing capacity to impact property markets.

“The removal of COVID-19 restrictions means that buyers may be less likely to dedicate as much of their income to housing in the months and years to come,” he said.

“Some potential buyers may even decide that their current home is sufficient. Although there has been no movement in variable mortgage rates – they’ve fallen if anything – the lift in fixed rate mortgages signals that rates will increase and borrowers no longer have the security of locking in ultra-low rates for several years.

“While the changes by APRA around credit availability have been mild to date, they are tightening credit availability and reducing borrowing capacities. In turn, this will likely contribute to a slowing of demand for housing and means that prices won’t rise as rapidly as they have over the past year.”

The surge in listings will also continue to reduce competition among buyers, according to Mr Kusher.

“The uplift in new listings since lockdowns ended is likely to lead to a better balance between the supply of homes for sale and buyer demand,” he said.

“This is expected to result in properties taking slightly longer to sell as potential buyers have more choice and less competition, meaning they don’t have to move as quickly to secure a property and may not have to pay a premium.”

After an incredible year for property In 2021, where prices rose by 23.8 per cent across the country, the rate of growth started to slow over the second half of the year. This pace of growth is expected to slow further in 2022, bringing mild relief to buyers according to the report.

The markets with the strongest price growth over the past year have been Darwin (35.8 per cent), Hobart (34.0 per cent) and regional Tasmania (33.3 per cent), while Perth (9 per cent) was the only major region to see prices increase by less than 10 per cent over the year.

The report notes that over the course of 2021, there was a large shift towards houses compared to units with the premium now the largest on record in Sydney (85 per cent), Melbourne (54 per cent), Brisbane (68 per cent) and Adelaide (67 per cent).

There were 40.1 per cent more sales nationally in 2021 than there were in 2020, while total capital city listings fell by 5.4 per cent year-on-year, and the combined regional markets fell 26.2 per cent.

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.

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