Welcome to the Autumn Property Report 2022.
At the end of 2021, there were signs that the stellar property market was drawing to a close. However, in early 2022, these, by and large, disappeared, with the market once again kicking up a gear.
CoreLogic reported that the national median property price lifted 1.1% in January – traditionally a quiet month for real estate sales – with Brisbane (2.3%), Adelaide (2.2%) and Canberra (1.7%), as well as the combined regions (1.8%) recording the country’s biggest gains. We also saw auction clearance rates in Sydney and Melbourne rise to around 80% in February. And that was off the back of a higher sales volume than we’ve had since November 2021.
Interest rate rises and a federal election
How long this strong market can continue, I think, depends on four factors.
First, after two years of record lows, an interest rate rise (or even more than one) is almost inevitable this year. We’re already seeing many buyers factor this into their budgeting, especially in the more expensive property markets, such as Melbourne and Sydney. As buyers reach their limits, and banks determine they cannot borrow any more, we’ll see a natural ceiling form over price growth.
Second, this is a federal election year – with a national poll now looking likely for May – and elections always impact the property market. In 2019, for instance, we saw activity stall in the lead up to election day, with the market only returning to full swing once the result was decided. This time around, we expect to also see an impact, although we don’t expect it to be quite as pronounced. Unlike in 2019, when the ALP pledged reforms to negative gearing and CGT, neither party has announced any policy that will impact the property market.
Third, mixed in with the election is Easter, which is traditionally seen as a pause for the property market. Few people go to auction over the Easter weekend and with borders reopening people now returning to holidaying, we expect fewer people to be around.
Fourth, although vaccination rates are high, people are back in the office and the economy is growing, it’s impossible to know what the future has in store when it comes to COVID-19.
Flowing on from that, every time there has been a wave of the virus, we’ve seen property prices rise and I think there are strong indications that we’ll see a busy March and April across the country. There are still many buyers in the market and, speaking to agents around the country, there is a lot of stock that is about to come online, giving these buyers a lot more choice.In other words, the supply curve could rise even more sharply than the demand one.
Commuter towns to win
Since the virus hit we saw more people relocating to the regions. Now we’re seeing this phenomenon focus in those areas within an hour or two of our major capitals. These are the areas from which professional workers can live a more relaxed lifestyle and work from home, but also easily commute to the city up to a couple of times a week.
The Southern Highlands, Central Coast, Illawarra and Hunter regions are all beneficiaries of this trend. So too are areas such as the Mornington Peninsula and Surf coast in Victoria and, of course, Queensland’s Gold Coast and Sunshine Coast. I expect that these will continue to be among the highest growth areas over 2022.
I also expect a lot of the action may come from buyers over the age of 55 cashing in on recent growth. Many in this group are still working but have greater flexibility in their employment than less mature buyers. They’re often looking to sell the family home and split the proceeds of that sale between a city pad and a larger regional home. Often, if there’s money left over, they’re also funding their children into the purchase of their first home.
Timing the market
Finally, if COVID-19 has taught us anything about real estate, it’s that it’s impossible to predict what lies ahead or how the market will react to it. It’s worth remembering that at the start of the pandemic many experts were forecasting price falls of up to 30%. Instead the market went the other way.
For that reason, my advice is that there is little value in trying to time the market. The safer thing to do is to try to buy and sell in the same conditions. For that reason, I’d advise buyers and sellers to be confident. There will be rises and falls in property prices but ultimately quality properties in quality areas always tend to come out on top.
14 Lang Rd, Centennial Park. Sold by Ben Collier for over $20 million in 2022.
Please download the complete report from the download button, inside you will find:
Introduction to the Spring Property Report by Geoff Lucas
National Property Market overview by Matt Lahood
Brisbane overview by David Price
Perth overview by Stuart Cox
Melbourne overview by Peter Kakos
Sydney overview by Luke Evans
ACT overview by Sam Dodimead
Property management overview by Maria Carlino
Projects overview by Steven Chen
Finance overview by John Kolenda
