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Property Drivers in 2022 - December 2021

By Guest Blogger, Terry Ryder, founder,

hotspotting.com.au and propertyU

 

The coming year will be another strong one for residential property - but it will be different from 2021.

The 2022 calendar year will be more segmented. After 12 months in which prices rose strongly almost everywhere, 2022 will see big growth in specific locations and more moderate increases in others.

The growth drivers will be similar to those in 2021, but with some additional strong factors coming into the mix.

• The Exodus to Affordable Lifestyle is a long-term trend which pre-dated the pandemic, and it will continue in 2022 and beyond as people embrace to opportunity to achieve a different lifestyle while working remotely.
• The savings accumulated by people in lockdown or otherwise restricted (e.g. prevented from travelling) will continue to pour into real estate.
• The infrastructure-led economic recovery promoted by federal and state governments is likely to have an even bigger impact on residential real estate.
• The buying of ex-pat Australians returning home will continue.
• The stronger-than-expected national economy and lower than expected unemployment will continue to impact real estate positively.
• The rising numbers of investors getting into the market will put pressure on prices.
• Cheap finance will continue to play its part. Media hysteria about the likelihood of rising interest rates and the shattering impact of it will be shown to be fake media.

There will be some differences in 2022. The supply of properties for sale will be higher in some markets and that will tend to take some of the heat out of prices.

But other new factors will tend to put further pressure on prices. The opening of international borders, if it’s maintained, will bring back overseas migrants, which will unleash another wave of real estate demand.

The return of overseas students will also boost markets, by providing rental demand to inner-city areas.

And the full impact of the infrastructure rollout is yet to be fully felt. At its height, its effect on property markets will be considerable.

The key difference in 2022 will be the segmenting of the market. While we’ve experienced a nationwide boom over the past 12-18 months, some locations have been booming for far longer.

Hobart and Tasmania, key markets in regional Victoria, iconic sea change destinations like Byron Bay and Noosa – they have all had strong price growth over 3-4 years. But the sales activity data suggests some of these locations have passed their peaks and the level of price growth is likely to fade.

But many markets are just getting started. The two cities which had the fastest growth rates late in 2021, Brisbane and Adelaide, are early in their growth cycles and we are likely to be a continuation of high price growth in these cities. Perth was a relative under-achiever in 2021 and is poised to do better in the coming year.

Regional markets in New South Wales and Queensland will be particularly strong. The Rising Stars report written by Hotspotting and published by Canstar ranked Regional NSW No.1 and Regional Queensland No.2 in terms of their growth prospects for 2022.

While the stand-out growth to date has been key regional markets close to the capital city, expect locations further afield to do well in 2022.

Overall, 2022 shapes as another strong year for residential real estate, but with the strong growth less widespread than in 2021.

 

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