Property Market Forecast 2022
What’s the outlook for the Australian property markets for 2021 and beyond?
This is a common question people are asking now that our real estate markets are up and running again.
A new report released from ANZ Bank predicts house prices at the national level will rise to a strong 17% through 2021, before slowing to 6% in 2022.
Sydney house prices increasing by up to 19% by the end of the year
Melbourne house prices rising by over 16% over the year
Brisbane house prices rising by 16% this year
Adelaide house prices rising by over 13% over the year
Perth house prices rising a whopping 19% in 2021
Canberra house prices rising by over 16% in 2021, and
Darwin house prices rising by over 16% this year.
What a turn around from all the pessimistic forecasts all the banks made in the middle of last year.
ANZ senior economist Felicity Emmett expect the Australian Prudential Regulation Authority (APRA) would then introduce macroprudential measures to slow house price growth into 2022.
Clearly, we have worked out way through many of the effects of the Coronavirus Pandemic and out of Australia’s first recession in 30 years.
The media is now full of property-related headlines, some on the positive side telling us how our property markets are surging and others on the negative side warning that decreasing affordability will limit our ability to get into the property market.
Historically low-interest rates and FOMO (fear of missing out) have driven dwelling prices to record new highs – but we’ve only recently surpassed previous 2017 peaks and this means double-digit growth is on the horizon for many areas around Australia in 2021.
The year has started on a very strong note, with increased buyer activity at a time of lower availability of stock of quality properties in popular areas and this is reflected in rising property values and boom time auction clearance rate levels.
But, there is not one “Australian property market” and even within each state, there are multiple markets, divided by geography, type of property, price point, etc so in this detailed article I’ll explain what our research suggests is ahead for Australian house prices.
The following chart from NAB shows that house prices have continued rising through April, up 0.6% so far this month across the five major capital cities, all five participating in the gains, Sydney continuing to notch up the fastest pace.
The rate of growth so far this month suggests a somewhat slower pace than the heady pace of March.
With less than a third of the year gone, prices across the five majors have risen 6.2% year to date
* Sydney notching up a gain of 7.5%,
* Brisbane-Gold Coast seeing prices up 5.9%,
* Melbourne and Perth both rising 5.3%,
* While Adelaide prices have risen 3.7%.
Source: NAB April 12th, 2021
In fact, the modest coronavirus-induced housing correction came to an end in the middle of October 2020, and that our housing markets are clearly on the move again.
Source: NAB and Corelogic April 12th 2021
So far this year there has been a palpable change in market sentiment on the ground and this is reflected in strong buyer activity at a time when there is a little good stock on the market.
But, as I said, there is not one “Australian property market” and even within each state, there are multiple markets, divided by geography, type of property, price point etc so in this detailed article I’ll explain what our research suggests is ahead for Australian house prices.
The is a “perfect storm” of factors suggesting that 2021 will be a great year for property investors: –
Consumer confidence has been gradually improving, as has business confidence.
COVID numbers are very low and the prospects of the success of our vaccination program is excellent.
Our economy is improving faster than many expected and likely to grow strongly in 2021-22.
Jobs vacancies are growing and unemployment is falling.
Auction clearance rates remain consistently strong, not just in the two big auction capital of Melbourne and Sydney but around Australia.
While more buyers and sellers are in the market and transaction numbers have increased considerably, the lack of good quality properties for sale has created a seller’s market, where buyers have little choice and are pushing up values of “A grade” homes and investment-grade properties.
At the same time, the banks are keen to write new business – another positive for our housing markets.
Bank loan deferrals have been falling – there’s no chance of an avalanche of forced mortgagee sales as many were worried about last year.
The “guarantee” by the RBA of interest rates remaining low for at least 3 years is giving home buyers and investors confidence to commit to purchasing properties
Moving forward further jobs creation, consumer confidence and business confidence (leading to spending and employment) will underpin our housing markets.
Just to make things clear…we’re not going to fall off a fiscal cliff as those naysayers predicted.
And there is no Australian property bubble that’s about to burst as those perma bears keep telling us.
Quite the opposite – as I just mentioned, there is a confluence of multiple growth drivers that will propel our property markets into 2021 and 2022.
One after the other, all the major banks have done 180° about face now forecasting strong house price growth over the next two years