Property prices will soon be “demand-led” as opposed to “supply-short”, with a leading buyer’s agent predicting micro markets with varying growth will materialise in 2022.
After record growth in 2021, Arjun Paliwal said the property market would start to vary in the next 12 months.
“Australia experienced an unprecedented property boom in 2021 as households saved more cash, government grants and stimulus packages propped up the economy, expats returned and purchased property, lifestyle became a higher than ever priority, interest rates remained low, existing housing supply took a nosedive, and all of this happened while an infrastructure boom is in play,” Mr Paliwal said.
“In 2022, we can expect property prices to be led by high demand, with select areas extending their growth cycle rather than a blanket approach of low stock nationally.
“Rental vacancies for apartments likely to decline as international borders open, a fall in first-home buyer activity is expected in our major cities, and Aussies will continue to make a sea or tree-change.”
Mr Paliwal, who is the founder of data-led buyer’s agency InvestorKit, said home buyers would need to be vigilant this year as some markets would begin to slow down.
“Unlike in 2021 when property markets across all of Australia increased, it’s important that investors don’t go into 2022, thinking that they can just buy anywhere and the same upward trends will happen again,” he cautioned.
“The last time growth occurred on a national scale in this similar fashion was 2000 to 2004. While large amounts of growth did occur in most locations, not all carried on with the same intensity through that boom period.
“Buyers need to be strategic and look at the data to understand where markets continue at this pace.”
Some of the major trends that occurred in the past 12 months are likely to continue, including working from home and moving away from major cities according to Mr Paliwal.
“The pandemic made people rethink their living situations and seek a better lifestyle sooner,” he said.
“We saw people try different tactics to achieve retirement earlier by downsizing or investing. It’s not a new trend – it simply became supercharged during lockdowns – and will continue at higher than previously seen levels.”
Mr Paliwal also expects to see first-home buyer activity continue to decline.
“As property prices rose to such high levels this year, many first-home buyers have been priced out amongst major markets,” he said.
“The biggest challenge for those looking to buy in 2022 and beyond will be their home deposit. While money remains cheap, benefits on offer with price caps attached aren’t very possible to stay under due to price growth.”
Mr Paliwal said rental vacancies would also trend down and put pressure on prices as international borders reopen and skilled labour immigration and international students return.
He said apartment rentals would recover first, and this would be welcome relief for investors who were caught in the apartment exodus when the pandemic started.
Borderless buying is another trend Mr Paliwal expects will grow as buyers increasingly make investment decisions based on data.
“The concept of virtual buying has been around for some time, but it has accelerated during the pandemic and through greater professional presence of buyers agents to make it easier to buy outside one’s own city or state and ease buyer’s concerns,” he said.