4 Housing Market Trends for 2022

Housing Market Trends 2022

2021 has been a crazy year for Australians and the housing market. Intermittent lockdowns and the federal government’s response has changed the face of property investing in and out of Australia’s capital cities.
Our award-winning property and finance experts have looked at potential housing market trends in 2022 that could dramatically affect the current and future standing of the market. This is to best inform you on the sweeping changes in the property market.

Working From Home Will Continue To Diversify Demand in Locations

The pandemic forced individuals and workplaces to re-evaluate how and where they work. Working from home is now commonplace, causing organisations to move to smaller, and less central offices. Employees now have the ability to move to more affordable locations and travel into their workplaces less.

This trend is showing no sign of slowing, with house prices continuing to grow in the regions and around less populated capital cities such as Hobart and Brisbane. House prices in coastal areas have grown dramatically, with annual property price growth in locations such as Coffs Harbour growing by 18.2%, Taree by 15.6%, and the Mid-North Coast by 12.2%.

Cities outside of Sydney and Melbourne are also experiencing significant growth, with more investors looking to take advantage of the RBA’s record-low 0.1% cash rate. Brisbane property has grown 26.4% over the last year, with Hobart experiencing 28.4% price growth.

It is expected that diversified demand in locations will continue to grow, with lower prices outside of capital areas granting the opportunity for investors or owner-occupiers with lower financial resources to get into the property market.

Boosted Housing Market Demand from Eased Border Restrictions

Another housing market trend for 2022 is the likely easing of border restrictions and increase in demand for Australian property from overseas. International students and workers, and Australian ex-pats will be looking to rent and/or purchase property, likely in inner-city dwellings around universities and major working hubs. This will likely put upwards pressure on property prices in these areas, and could prove to be lucrative investments for those invested in these areas.

Alongside this, premium property listings in capital cities will likely increase in demand due to Australia being back open to international high net worth owner-occupier investors. These prices will further skyrocket due to the demand for improved living spaces with working from home.

Home Construction to Increase

With property prices growing to extraordinary heights, more prospective home owners are being priced out of certain suburbs. To get into the property market, many homeowners are choosing to buy land in regional areas on the outskirts of highly demanded areas, and are building their own property.

As shown on the above graph, in 2021, 88,445 new homes commenced construction. This dramatic rise was also aided by the government’s Homebuilder scheme. This rise in commenced construction will likely see a rise in completed homes in 2022, increasing supply and easing house price pressure in these outer suburban areas.

Tightened Supply Of Finance

Another housing market trend for 2022 is the tightening of mortgage lending criteria for banks and financial institutions, meaning that first home buyers, and those with less financial capacity will have more difficulty in taking on a mortgage. With many Australians taking on a mortgage in 2020 and 2021 to get into a massively ballooning market, potential issues have arose regarding the ability of some of those individuals to pay back their loans if rates were to rise.

APRA has mandated that banks and financial institutions assess their borrower’s capacity to repay loans if interest rates increase by 3%. Originally, this value was 2.5%. This will mean that first home buyers will need to be able to better prove their ability to repay a greater amount. This will reduce the amount of available buyers in the market, potentially cooling the market in certain areas.

Whilst this article has outlined general trends that may occur in 2022, nothing is certain. If you are looking to buy property in 2022, it is imperative that you receive the right advice to ensure that you are making the best decision for your goals and financial situation. Vision Property and Finance has over 20 years of experience and results for our clients, and we would be happy to assist. If you’re interested, please get in touch with one of our award-winning staff here.