Housing Market Top 6 Key Trends 2022

 March 16, 2022

By  Chase Edwards

The Australian housing market had a record-breaking year in 2021. Lucky for us all, realestate.com.au has wrapped up the top 8 trend predictions for the housing market in 2022. We have listed the top 6. There is a lot in store for property markets this year, so what do we have on the horizon?

Never-ending demand, limited supply of properties, and record low-interest rates united to create a perfect foundation for house price growth in 2021.

The real force behind the explosion was the continuous re-examination of lifestyle desires and living needs by Australians. This, when paired with the low cost of borrowing, enabled more people to afford the luxury of larger mortgages and considerably higher budgets.

With COVID still lurking and the Omicron strain perfectly timed to remind us that there is no certainty. For many, predicting the year ahead is a daunting and ominous task. However, with the strain now in our rearview mirror, it is time to flip the narrative.

1. 2022 will bring more balance to the housing market

Realestate.com.au’s first prediction is the competition we saw for houses in 2021 should start to decrease. Towards the end of 2021, we saw elevated new listings. November brought with it a decade high for new listings in capital cities.

Then, coupled with the easing of COVID restrictions in New South Wales and Victoria, helped boost seller confidence and buyers took advantage.

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will the housing market crash in 2022 Australia?

You can expect new listings to remain elevated during the start of 2022, as would-be sellers respond to strong price growth, meaning some buyers can expect the intense levels of competition seen in 2021 to ease.

Greater willingness from sellers to list their properties will mean more choice and an improved balance between supply and demand. This should also contribute to easing price growth in 2022.

2. Slowing Price Growth

Price growth to slow from the breakneck speeds seen in 2021

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The Australian housing market had its highest demand in 2021

Never before seen skyrocket house prices, paired with falling mortgage rates, will slow annual price growth. Any money saved from lower interest rates in 2021 was very quickly diminished by record-high housing prices.

This will contribute to a slower pace of price growth in 2022. As well as, the Australian Prudential Regulation Authority’s macro-prudential changes, which took effect late last year, have slightly reduced borrowing capacity for new buyers.

However, even as last year’s catastrophic price increase softens, annual price growth in the coming year is predicted to match or exceed long-term trends.

3. Equity Will Be The Winner

Work from home on the rise and the constant lifestyle change of lockdowns has seen many buyers searching for larger homes and more space. After the significant rise in housing prices, many existing homeowners are sitting on substantial equity.

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The Housing Market Will Be Run By Existing homeowner’s House Equity

This blend is forecast to increase upgrader volumes, especially as the shift in lifestyle preferences is still being exacerbated. The sudden hit of the Omicron strain has extended the necessity for remote work.

As vaccines are in place and cases have decreased, hopefully, the year will be less affected by restrictions, and buyers and sellers who have held back until now will have the opportunity to transact without obstacles – providing another tailwind for activity.

This said, the price gap between units and houses, will make it more difficult for apartment upgraders looking to purchase a house. With it growing wider than has it has ever been this year.

4. Will Units make a comeback in the housing market?

With international borders re-opening and the following return of skilled migrant workers and international students, this increases the demand for inner-city rentals.

Rent has remained the same or declined in inner-city locations due to the lifestyle change from the pandemic. Whilst Rents in regional areas have surged. Coming up to two years after COVID-19 lockdowns resulted in empty city apartments, demand could be set to recover as life returns to CBD’s.

House prices have increased and now rest heavily over the unit prices, with the pandemic driving one of the biggest shifts we’ve ever seen when it comes to housing preferences. We have seen credit conditions tighten and migrating to be the norm for us now, demand for units could rise as buyers look for better suited rental options.

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will units make a comeback in the housing market?

5. Investors remain active

In 2021, investor activity increased significantly, and this may add to the demand for units. Currently, Investor inquiries to real estate are the highest it has been. There has been a steady rise within the last 2 years.

Typically, there are higher interest rates for investors. Keeping this in mind, and coupled with units record cheap compared to houses, the added pressure in rental markets and affordability factors could drive demand into units.

Mortgage demand from investors has risen by around 10% and with APRA quietly tightening credit conditions, investors may look to take advantage of rental recovery and the unit discount.

6. Beach Side Views top priority

The longing for housing locations near the beach was a large feature of demand in the 2021 housing market.

Remote workers were the driving force behind this want, with the office life being adapted to house living. The desire for a beach or tree scenery increased.

Although the demand for this might decrease in the cities, southeast queensland will see an icnrease in the urge of renters requiring beachside living.

The trend in remote work is on the rise and renters are prepared to kick the high price tag of inner-city living to live in more regional scenic areas.

In conclusion, though not a match for 2021’s historic year, 2022 is still expected be a strong year for housing.

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