Well, our property markets are up and running for 2022 and already there are mixed messages in the media about what’s ahead.
A recent Podcast from Australia’s leading housing Economist Dr. Andrew Wilson, whose forecasts have proven to be very correct.
I don’t know if you’ve noticed but there seems to be two types of opinions flouted by the commentators.
On the one side is the glass half-empty crew who see interest rates rising, Omicron repercussions and they’re suggesting you’ve missed the peak of the property opportunities this cycle.
On the other side of the market is the glass half-full crew who feel more market opportunities are ahead of us, our economy is improving as we are coming out of the pandemic and with our borders reopening opportunities abound.
Below are some of the topics discussed by Dr. Andrew Wilson
- Will RBA Rates Rise in August? – Nonsense
- Reflecting current data, the latest RBA statements and depressing covid outlook predictions of official interest rate rises as soon as August is clearly non-sensical according to Dr. Wilson.
- Will property values continue rising in 2022?
- In general property values should increase throughout 2022, but at a slower rate of growth than in 2021.
- Will 2022 be the year of rising rents?
- Rents should also keep increasing in 2022 as vacancy rates tighten as there is currently a desperate shortage of good rental accommodation around Australia.
- Are we in for a 2-tier property market moving forward?
- I can see properties located in the more inner and middle-ring suburbs, particularly in the more affluent suburbs and in gentrifying locations, significantly outperforming cheaper properties in the outer suburbs.
- Will more property investors return to the market in 2022?
- So far this property cycle has been driven by owner-occupiers and first home buyers, but now more and more investors are getting into the market. However, if history repeats itself, and it most likely will, many of these investors will sell up over the next few years as they realize that property investment may be simple, but it’s not easy.
- Will there be a flight to Quality?
- During the last few years, FOMO (fear of missing out) led inexperienced investors and homebuyers to purchase almost any property that their budget would allow, and they were fortunate as a rising tide lifted all ships. But as the market matures, we will see a flight to quality with well-located A-class homes and investment-grade properties still selling well, but secondary properties having trouble finding buyers.
- Will our economy continue improving?
- With the prolonged lockdowns in Australia’s two largest cities keeping people indoors and spending less, households have squirreled away an estimated $200 billion this year.
- Much of this will be spent over the next few years in an economy-boosting wave of consumption as life returns to normal. Some of it will go to paying down debt and some will go into buying assets.
- What will APRA do as they watch the market carefully?
- So far APRA has only really tapped its foot on the brake pedal; it hasn’t really pushed down hard on the brake to slow our markets down, but if the property markets continue growing too fast for their liking they are likely to introduce stricter measures.
- Will most property predictions be wrong?
- The property pessimists will still be out there next year telling us not to invest and that our property markets are going to crash. And as has been the case for the last few decades – they will be wrong.
The bottom line
Clearly, many of us would like to forget the last few years, but that won’t be easy. Let’s hope 2022 will be a year we are going to want to remember.
It will be interesting to look back at the end of the year and see how many of these trends have eventuated.
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