But Aussies are being cautioned to be more strategic about their purchase decisions over the next year, with property price growth expected to slow.
“Australia experienced an unprecedented property boom in 2021 as households saved more cash, [and] government grants and stimulus packages propped up the economy,” Arjun Paliwal, head of research at InvestorKit, said.
“Expats returned and purchased property, lifestyle became a higher-than-ever priority, interest rates remained low, existing housing supply took a nosedive, and all of this whilst an infrastructure boom is in play.”
Here are six property trend predictions for 2022.
1. First home buyer activity will decline
Paliwal said he expected first home buyers applying for new loans would decline next year as a result of the extreme growth seen this year.
“As property prices rose to such high levels this year, many first home buyers have been priced out amongst major markets,” he said.
“The biggest challenge for those looking to buy in 2022 and beyond will be their home deposit.”
2. Prices will depend on demand rather than supply
The first wave of the property boom this year was driven by a lack of available properties hitting the market, but Paliwal said he expected this to change next year.
“Many areas carry a multitude of reasons for their respective cycles to continue: localised strength in their economies, the continuation of the exodus, affordability, weaker last-10-year rates of growth paving [the] way for a greater cycle length and high current market pressure,” he said.
“These areas are expected to be the majority when counting the total number of cities in Australia seeing high demand.”
3. The seachange and treechange will continue
While working from home and flexible work arrangements played a part in the seachange and treechange trend, Paliwal said retirement plans being brought forward would be the biggest driver due to the ageing population.
“The pandemic made people rethink their living situations and seek a better lifestyle sooner. We saw people try different tactics to achieve retirement earlier by downsizing or investing,” he said.
“It’s not a new trend. It simply became supercharged during lockdowns, and will continue at higher-than-previously seen levels.”
4. Borderless buying will become the norm
Paliwal said consumers had become more comfortable buying beyond their backyard and fewer were compromising on buying an apartment if they couldn’t afford a house.
He said growth across many locations had changed people’s opinions on strong markets - traditionally considered just the big cities.
“The concept of virtual buying has been around for some time, but it has accelerated during the pandemic and through greater professional presence of buyers agents to make it easier to buy outside one’s own city or state and ease buyers’ concerns,” he said.
5. Growth won’t occur at this pace again across all markets
Paliwal said that while 2021 saw a great deal of growth across the entire country, it was unlikely that would occur again.
He cautioned buyers that they shouldn't go into 2022 thinking they could buy anywhere and see the same upward trend again.
“Each micro market will have its own factors influencing growth,” he said.
“The last time growth occurred on a national scale in this similar fashion was 2000 to 2004.
“Whilst large amounts of growth did occur in most locations, not all carried on with the same intensity through that boom period. Buyers need to be strategic and look at the data to understand where markets continue at this pace.”
6. Rent prices will rise
As international borders reopen and skilled migrant workers and international students return, Paliwal said apartment rentals would see growth.
“This is good news for investors who were caught in the apartment exodus and saw rents decline during this period,” he said.
“However, the impact of lower rates of vacancies will see more pressure on rental prices.”