Omicron strain won’t impact property

The Omicron strain of the coronavirus will have a negligible impact on the trajectory of the housing market.

Insignificant impact from Omicron

To a certain extent, the last couple of years should have reminded us that making predictions is very hard, especially when they are about pandemics or the future! That having been said, there’s little to indicate that the latest strain of the virus will have any meaningful impact on housing market trends.

After an initial wobble, stock markets have been resurgent, and financial markets have been unperturbed, which is likely to be a better indicator than the latest alarmist headline. Thus the Omicron strain will have a negligible impact on the property market.

Stay up to date with the latest property news

Subscribe to our newsletter to get the most up to date property news and insights delivered straight to your inbox.

Markets are possibly factoring in the various news about the lack of serious cases of the latest Omicron strain to date, with most reporting mild symptoms, although case numbers do appear to be rising rapidly.

Moreover, a look back at how the housing market fared through the past two years suggests that there are more crucial factors at play than the latest strain of the virus, such as the cost of mortgage debt, and the supply of properties being made available for sale. Find out what is in store for the property market in 2022.

Cooling naturally

A range of factors combined will help to take the heat out of the housing market in 2022, such as gradually rising mortgage rates, more vendors looking to lock in gains, and more cautious buyers as affordability bites following the strong price gains of 2021.

Cooling of the housing market is inevitable in 2022 after a storming year in 2021, but the latest virus strain isn’t a key factor.

The rate of immigration hasn’t been a key factor in driving the market over the past couple of years, with the notable exception of CBD and some inner-city apartments, where the absence of international students has been felt particularly keenly.

Remember, though, that the closure of the borders didn’t lead the doomsday outcomes many commentators predicted, partly because corrective policy measures were taken. In fact, all eight of the capital cities recorded double-digit price gains over the year to September, with most recording price rises of about 20 per cent or higher.

Figure 1 – Capital city housing prices show the Omicron strain will have a negligible impact on the property market.
Figure 1 – Capital city housing prices

Population growth to resume

Buyers sentiment has been broadly unchanged by the latest virus developments. There is generally speaking less fear of missing out now.

But the pattern of housing trends through the pandemic has taught more buyers to look through the short-term noise and to buy quality properties when they can, while taking a medium-term outlook.

We wouldn’t be surprised to see employment surging towards a record high approaching 13½ million through 2022, with the economy likely to grow by about 5 per cent per annum for the next couple of years, in turn helping to push the unemployment rate down to 4 per cent for the first time since the mining boom go-go years.

There might be a delay in the rebooting of immigration due to Omicron. But looking through the noise, population growth should be back to over 300,000 per annum whenever travel does become easier, and potentially even nearer to 400,000.

Download the free Where to Buy report

Our new and personalised Where to Buy report will give you a head start in your property journey. Receive a shortlist of the top suburbs to buy in, based on your budget and preferred location.