Michael Yardney is the director of real estate investment consulting firm Metropole Property Strategyists, with offices in Sydney, Melbourne and Brisbane. He has been repeatedly voted a top real estate investment advisor and one of Australia’s 50 Most Influential Thought Leaders. Mr. Michael’s opinions and analysis frequently appear in many mass media.

Mr. Michael made 5 comments about the Australian housing market in 2022. In general, despite a lot of pressure from high interest rates, the Australian real estate market in 2022 will still follow an upward trend, along with the strong growth of the Australian economy . While rents are still increasing, Australian real estate continues to maintain its position as a good and effective investment channel in the eyes of investors.

1. Real estate price growth is slowing down

Housing price growth is slowing and prices are likely to drop a bit later in the year as the Reserve Bank of Australia (RBA) raised interest rates in early May this year to contain inflation.

An increase in interest rates leads to a significant increase in minimum repayments and a decrease in the borrower’s ability to borrow. On the other hand, the return of immigration, falling unemployment and rising wages as well as rising exports and a strong economy will be supportive factors.

However, he said, overall property values ​​will continue to increase in 2022, but not everywhere and not as quickly as in the past two years.

Last year was a brilliant year as home values ​​rose almost everywhere at a record pace and total property values ​​in Australia surged by nearly $2 trillion. However, in the future, the rate of real estate price growth will slow down for a number of reasons including:

  • Affordability is limited: Low interest rates in the past have caused real estate prices to rise 20-30% higher than at the beginning of the cycle. As interest rates have risen and workers’ wage growth is still modest, many individuals will not have enough money to buy a home at the moment.
  • Pent-up demand is dwindling: The Covid-19 epidemic has delayed many families’ moving plans. So, when life stabilized again, the housing market became extremely active. However, this demand is decreasing over time.
  • Fomo (fear of missing out) is gone: Buyers are being more cautious and taking more time before deciding. While last year, the buyers tended to be in a hurry.

2. Importance of amenities and neighborhoods

High-quality, comfortable properties are receiving more attention. As buyer preferences change, some people will be willing to pay more for properties that meet the criteria, with a little more space and security. But the factors are not limited to the property itself, a “liveable” location will also play an important role.

Many families today are willing to pay extra to be able to work, live and play within a 20-minute drive, bike or walk from home. They will look for nearby amenities such as shopping, business services, education, public utilities, entertainment and sports, etc.

3. Rent will increase sharply

Demand for rent is still growing while the vacancy rate is very low, which will cause rents to continue to increase throughout 2022.

Especially when Australia has opened its borders, it will continue to increase the demand for rent because most immigrants will choose to rent first rather than buy. In addition, when foreign students return, rental apartments near universities and educational institutions will quickly fill up.

4. Rapidly growing economy

The Australian economy will continue to grow and unemployment will fall. Accordingly, more new jobs will be created. As the economy and people’s quality of life improve, the real estate market will also follow the rapid development momentum.

5. Real estate will always be a potential investment channel to attract investors

As rents continue to rise and first-time homebuyers drop, strategic investors with long-term goals will start entering the market.

Leave a Reply