The Six Property Trends for 2022 According to an Expert
From investors to owner-occupiers, there is something for every kind of buyer over the next 12 months and Maker Advisory's Reece Coleman lists the biggest trends to watch.
The heady price rises which put record profits in the pockets of Australian homeowners in 2021 are already starting to flatten. In Sydney alone, home values jumped a notable 30.4 per cent in the past 12 months. However, Australian Bureau of Statistics figures show new mortgage commitments retreated 2.5 per cent to under $30 billion in October. What’s more, it has occurred at the expense of the new homebuyer as it was driven by a 4.1 per cent drop in owner-occupier new borrowing.
Property hunters can look forward to a less heated market in 2022 while investors benefit from rising rents. The new year will also bring growing demand for townhouses and inner-city apartments as sea-changers return, and price pressures are placed on new home builds by increasing construction costs and labour shortages.
We spoke with Reece Coleman, Head of Advisory at Maker Advisory, and here is his list of the main trends to watch for in the coming year.
1. Rising Construction Costs
Expect the renovation frenzy – ‘The Block’ effect – to wear off as increased material costs and labour shortages take hold. The same will apply to the home building market. CoreLogic data further shows residential construction costs rose nationally by 3.8 per cent in the three months to September this year, a jump that outpaced the CPI (0.8 per cent) over the same period. While competition for work may see some downward pressure on construction in the next few months, inflationary pressures will re-emerge: Arcadis forecasts Sydney’s construction tender costs to increase by 2.5 percent annually until 2025 while Melbourne’s have already increased 1.5 percent during 2021.
2. Inner City Rents to Recover
International students and skilled migrants have started returning, albeit slowly. In December 2021 these two groups were finally permitted to enter the country again without an exemption as the government softened tough border policies for the first time in 18 months. . As arrivals increase it will flow through to increased demand for leased properties and help kick start the recovery of inner-city rental markets hampered by border closures and lockdowns.
3. Increased Demand for City Apartments and a Metro Base
We are still to see just how much flexibility companies are truly prepared to give their workers. Some employers are having tough conversations with people who fled Sydney during the pandemic, finding themselves facing situations where employees work in Sydney but are suddenly living in the Hunter Valley or the Gold Coast. Many employers are justifiably requesting their workers return to the office at least part of the time. For this reason, we are going to see some people return to their home base or buy or lease a small property in the city.
4. The Rise of the Townhouse
Priced out of freestanding houses, many young professionals are now turning their attention to strata-titled townhouses, villas and apartments that offer good lifestyle amenity. Maker Advisory is seeing solid demand for townhouses within 10km of the Sydney CBD. Buyers will increasingly view these styles of properties as a viable option to a freestanding family home and its attendant maintenance costs. It is now apparent Australians are increasingly resigned to apartment and apartment-style living.
5. Less Fuel for the Property Fire
Come the new year, do not expect properties to sell like hotcakes regardless of condition or location. In the past 12 months, every property sold no matter these two critical factors. However, as we approach a more balanced market, higher numbers of properties will struggle to sell.
Price disparity will also return as more stock flows onto the market, especially in autumn and the first major selling period of 2022. Maker Advisory expects this time to see more properties go to auction but more to pass in. This will not so much be a reflection on a property, but a result of buyers not emptying their pockets to purchase at all costs as they did in 2021.
6. Emerging Investment Hotspots
Investors at the ready! Buyer’s agents are keeping a close watch on those ‘sleeper suburbs’, those traditionally old-fashioned but now up-and-coming areas near beaches and amenities that are still yet to see significant shifts in property prices. Many of these suburbs offer great lifestyle benefits with proximity to beautiful beaches and bushland, as well as public transport, schools and shopping hubs.
Lastly the 2032 Brisbane Olympics might be a full decade away, yet there is every reason to keep a watch on property markets in the Sunshine State capital. In years to come, Brisbane will be increasingly regarded as more of a contemporary of Sydney and Melbourne and no longer the ‘little sibling’.
