A Look Back On 2021 & Looking Forward To 2022

The Property Pod

A Look Back On 2021 & Looking Forward To 2022

It's the first week of the year and the Property Pod team are back for their first pod of the year.

The team look back over what has been described as a Golden Year of Real Estate for home owners in 2021- and look forward into what is forecast for the year to come.

One thing is for sure, its going to be a big year for the Property Pod & 4one4 Property Co.

Jump in to the latest episode here (or wherever you get your podcasts)

2021 Data

• In retrospect, 2021 has been a golden year for the real estate market in Australia.
• With the “fear-of-missing-out” in 2021, the past year showed the highest 12-month growth rate since 1989.
• Hobart was revealed as the hottest capital city property market with prices climbing up to 27.7%.
• Sydney (25.8%), Brisbane (25.1%), Canberra (25.4%), Adelaide (21.4%), Darwin (16.7%), Melbourne (16.3%), and Perth (14.5%).

2022 Price Predictions

• This 2022, prices are still expected to rise but will cool down before falling in 2023, experts say.
• The National Australia Bank (NAB) foresees a 4.9% increase in property values in 2022 and a 4% decline in 2023.
• Australia and New Zealand Banking Group (ANZ) predicts a similar pattern with a lift of 6% this year and a decrease of 4% next year.
• The Commonwealth Bank expects house prices to lift by 7% in 2022 and assumes the biggest price drop in 2023 out of the major banks of 10%
• Finally, Westpac is looking into an 8% rise this year and a 5% fall in 2023

Interest Rates

• Experts believe interest rates are likely to rise (hence, property prices will drop)
• House prices and interest rates are inversely proportional with each other: when one goes up, the other goes down.
• The Reserve Bank of Australia (RBA) mentioned that it won’t lift the cash rate until inflation reaches the 2 to 3 per cent range.
• Banks have already started hiking fixed rates while cutting variable rates to attract new customers. Hence, RateCity's Sally Tindall said borrowers need to be prepared for rate rises in 2022.

Moderation in Price Growth

• ANZ senior economist Felicity Emmett said affordability constraints and the increase in the supply of homes for sale – with record auction volumes and a significant lift in property listings in late 2021 – were the main factors currently driving the moderation in price growth.
• The impact of rising fixed mortgage rates and tighter lending standards would be seen throughout the year as house hunters faced reduced borrowing power.
• She forecast capital city property prices to rise another 6 per cent this year, with stronger gains expected in the first half of the year and growth to flatten by the December quarter before turning negative at the start of next year.

How Omicron Affects 2022 Figures

• REA Group's Eleanor Creagh said that lifestyle locations such as Queensland are also expected to do well in 2022 as people continue to leave states hardest hit by the COVID-19 pandemic.
• "If you look at the regional market, it's those well-connected, commutable regions that have good infrastructure and service provisioning that are going to continue to see heightened demand," says Creagh.
• Some analysts conclude that if people will have continuous fears for a new COVID variant such as Omicron, house prices could lift into double digits again this year.
• The emergence of Omicron for Ms Tindall is a timely reminder that we can never be certain despite anyone’s best predictions. "It’s too early to say what impact this new strain will have on rates, however, if borders keep opening and shutting, confidence is likely to take a hit," she mentioned.
• On the contrary, Pete Wargent, co-founder of BuyersBuyers said that the Omicron strain will have a negligible impact on the trajectory of the housing market.
• "To a certain extent, the last couple of years should have reminded us that making predictions is very hard, especially when they are about pandemics or the future. But, that said, there's little to indicate that the latest strain of the virus will have any meaningful impact on housing market trends," Mr Wargent explained.

First Home Buyers in 2022

• First home buyers started the year 2021 strong with a record-high number of first home buyer loans until it gradually declined month after month.
• Ms Tindall expects the same scenario to continue this 2022.
• According to the ABS lending indicators, the number of new loans being taken out by first home buyers has decreased by 11% in a year while the amount borrowed by them increased to 1% as house prices are directed upwards.
• CoreLogic's Eliza Owen warns that “first home buyers dropping out of the market now will compound wealth inequality down the track.”
• "If you're not in the property market, and you're just trying to save up, say, a 20 per cent deposit, property prices can really run away from you," she stressed.