Is the Wild Ride Over ?
It is no secret that the past two years have been incredibly turbulent for every area of Australian life. With another Christmas cast into disarray, 2022 is dawning as another year of uncertainty, not least for the property market. In 2020, the property market stalled, but the predicted crash didn’t eventuate, and in 2021, Sydney property prices roared back to life, jumping by 25.8% in the past 12 months, the highest annual appreciation since 1989. Now, investors, homeowners and potential buyers are asking not just what’s next, but is the wild ride over?
The answer, as with anything in our post-COVID world, is yes and no. Some predictions say that the market has already peaked in late-2021 and that 2022 will see the property bubble begin to deflate. However, the more likely scenario is that growth will continue in 2022, but at a much slower pace, with prices going down in 2023-2024. On this basis it looks as though the market is set to cool. Rates of housing values already began to soften in December 2021, according to CoreLogic.
Impactors
A key factor in predicting market changes is interest rates, which are currently at an all-time low of 0.1%. The RBA has acknowledged that interest rates will not increase until unemployment returns to around 4.5%, which is unlikely to occur in the next three years. However, other experts have predicted that interest rate changes could come as soon as 2023.
High vaccination rates and improved 'business' approaches to COVID will provide a degree of certainty to the economy. This certainty, however, appears to be waning in relation to the property market and the market is set to cool. Will the regions continue to outperform capital cities as they have in the past 12 months? Will international students return, providing lucrative rental income for investors? The adage of location, location, location, will inevitably be renewed with buyers having more freedom over where they choose to live than ever before.
Preparing for Change
While markets always fluctuate, Aussies can look forward knowing that the economy is showing strong signs of mending, and this will result in higher interest rates in the medium-term future. Investors, homeowners, and potential buyers would do well to be prepared for when they rise.
Want to be prepared? Get in touch with our team of property experts today for tailored advice on how you can make your next move in the property market.
John Wills
Principal
john@willsproperty.com.au
0467 443 838