Biggest Property Trends for 2022

Just in case you haven’t noticed, the property market went absolutely ballistic in 2021, rising to historical highs and growing over 29% over the year.

Median dwelling price in Sydney now sits at: $1,098,412

For investors and home- owners, 2021 will not be a year easily forgotten but as good as the view looks at the rear mirror, it is time to put 2021 behind us and look ahead on what’s in store in the property market for 2022.

Here’s 6 biggest trends we think will happen:

1. Rates and regulators likely to interfere and impact the market

The extreme growth last year nationally has already alerted the Australian Prudential Regulation Authority (APRA) into raising the "minimum interest rate buffer" for lenders from 2.5% to 3.0%, reducing the borrowing capacity for homebuyers. This will inevitably cool down the hot hot market, but by how much? We’ll have to wait and see.

Chatters about the RBA raising the interest rates have also heated up, with a growing number of observers predicting RBA to push forward its previous claim of adjusting the interest rate in late 2023 at the earliest. Whether if it becomes a reality or not, the speculation itself will have an impact on the overall market.

2. Demand for units catch up

Despite house prices reaching historical levels, the apartment market has observed growth but largely lagged the house market. The pandemic has caused a strong shift in consumer sentiment towards lower density living, big houses and open spaces. But this trend is expected to gradually reversed as the COVID situation eases and international borders re-opening.

Image by CoreLogic.

Generally speaking, the price gap between units and houses sits around 20-30% (it is currently at 50%!). Meaning there is some catching-up to do and a lot of space to grow for units.

3. People coming back from regions

WFH might be the way to go right now, but for some sectors and businesses, it is simply not the most effective way of operating. We expect this trend to reverse as well, slowly as the pandemic gets better.

Predicts SQM Research director Louis Christopher, “I’m expecting to see a swing back towards the cities over time and there will be a move away from the regions.”

Despite the increasing number of digital communication tools, people still want to live close to amenities, family and friends.

This will put more pressure on urban regions house prices.

4. Activity will decline - market to grow steadily

The staggering growth last year has pushed house prices to impossible levels for a lot of young and first-home buyers. There’s currently just 15 suburbs in Sydney where the median house price isn’t over 1 million according to Louis Christopher from SQM.

With regulators likely to interfere with the market, 2022 is forecast to be a year of "steadying the ship". Another 30% growth will definitely not happen.

5. Borderless buying is the new norm

During the pandemic, we see virtual buying rising into popularity. People can look at a property online in 3D in the comfort of their own home or even in virtual reality. Everything they need to know, from a detailed analysis of the suburb to floor plans, all can be found on the internet.

Adding all the buyer’s agent on the market right now into the equation, buying outside of one’s own city or state hasn’t been easier.

6. Rental market to bloom – more pressure on rental prices apartment rental vacancies will trend down

Rental vacancy rates around the country remains to be at record low and are likely to tighten even more in 2022. Compare to 2020’s figure in December to 2021’s; the number of vacant properties nationally has from 54,000 to 37,000 - a 31% reduction.

Perhaps a post-covid effect, people are not fazed to pay a premium for larger space and quality homes. With border-reopening not far off (fingers-crossed), which brings a large volume of international migrants into the city, 2022 will observe even higher pressure on the rental market. Read more about why.

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