The year that was…and the outlook for 2022

2021 saw a wild ride for the Australian property market, but 2022 should see the return of more balanced conditions.

The year in review

2021 was characterised by the proverbial ‘race for space’, and a dearth of properties being made available for sale. Meanwhile, low-interest rates saw a surge in demand for all property, particularly at the premium end of the detached house market.

There was a definitive demographic shift away from the centre of the capital cities, where offices and retail outlets were often closed for business, and all the while buyers sought houses with more space.

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Lifestyle destinations often saw unprecedented levels of demand, especially in coastal areas, and much of south-east Queensland is still pumping, even now. On average, regional markets outperformed the capital cities in 2021.

2021 was also definitely a year for first home buyers, but as the year wore on more investors began to return to the market, with rents rising at the fastest pace in 13 years, and we see that continuing in 2022.

Overall, total listings on the market have still been tracking below the 5-year average, and buyer demand in the market remains very robust.

Figure 1 – CoreLogic national listings figures

The outlook for 2022

Our forecasts have priced in more moderate price gains in 2022. At a macro level, we expect to see steadier price gains of 5 to 8 per cent in 2022, as low mortgage rates persist throughout the calendar year.

Following strong price growth in 2021, we expect capital city price increases in the range of 5 to 8 per cent in 2022.

Many regional markets are also likely to deliver solid growth during that period. Houses in lifestyle areas and/or with a high land value component and scarcity value are likely to enjoy strong demand and capital growth, both in the short and long term.

Some regional housing markets are now delivering unsustainably high rates of capital growth and are therefore likely to deliver only modest annual capital growth from this point in the cycle.

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More balanced market conditions

Overall, the market should be much more in balance than we have seen in 2021, where conditions were quite frenzied for a time. Our Property Investor Special Report for 2022 covers our key predictions and trends by capital city and state. And we also pick out some of our top locations for investors.

We expect detached houses to outperform in some of the more affordable Queensland suburbs in Brisbane, on the Sunshine Coast, and at Gold Coast, and we have also made some picks in other states.

Homebuyer sentiment has normalised now from previously very high levels. But as borders reopen we expect to see a very tight rental market in 2022, sturdy growth in asking rents, and we expect that investors will still be very active next year.

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