2022 PROPERTY FORECAST UPDATE
Continues Property Growth
We’re heading into a period of strong economic growth; jobs are being created and business and consumer confidence is high. I feel property values will keep rising in 2022, but not everywhere and not to the same extent as they have over the last two years.
Moving forward the rate of property price growth will slow and there are several reasons for this including:
- Affordability issues will constrain many buyers.
- The pent-up demand is waning.
- APRA – is intent on slowing our markets using macro- prudential controls.
- We will experience a two-tier property market.
In other words, not all locations will continue growing strongly moving forward. I can see properties located in the Cumberland Council area, inner northern and southern suburbs, significantly outperforming cheaper properties in the outer western suburbs.
Affordability may be an issue in outer western suburbs as the locals have had minimum little wages growth of the time when property prices have boomed. In these locations, the residents don’t have more money in their pay packet to pay the higher prices the properties are now achieving.
Rents will Increase Strongly
With very low vacancy rates, we will see rentals continue to rise throughout 2022. Then when our international borders reopen this will further increase demand for rental housing. If you think about it…when people initially move to a country or region, most rent first. In addition, when foreign students return, we’ll see increased pressure on apartment rents close to education facilities and in our CBDs.
Employment will Remain Strong
Our economy will keep growing and the unemployment rate should fall with many new jobs being forecast.
Over the next two years, economic forces will be different to the last few years. The supply of homes on the market for sale will be strong, Australians will be back to travelling overseas and spending their money differently than in the pandemic years, which encouraged people to renovate, sell and upgrade the homes they were working in under lockdowns and in due course interest rates will rise.
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