What is the outlook for property values in 2022?
It’s 2022, two years on from the beginning of COVID-19 pandemic and the Australian Property Market is still seeing the ongoing effects of the health crisis. So who’s to blame for Australia’s exploding property prices and housing affordability crisis?
Australia’s housing affordability crisis worsened significantly over 2021 as the property market boomed and prices reached new record highs. Price hikes have also seen the household debt-to-income ratio nearly triple over the past 30 years. With the ongoing pressures of pandemic along with the recent natural disasters, Australians are struggling to find peace in the overwhelming market growth.
The housing market is very complex, and a multitude of factors play into affordability, including land releases, tax policy, government incentives, banking regulation, overseas investor rules, immigration, employment, wages growth and inflation. Over the past two years, values have absolutely skyrocketed despite the world being in the grips of the COVID-19 pandemic. There has been much more demand than supply for a long time, and until the two reach more of an equilibrium, property values will continue to grow, and affordability will worsen.
What’s ahead for property values in 2022?
Investors are Returning
If the market has shown us anything, it is that investors are returning to the property market with confidence. Recent data from the Australian Bureau of Statistics confirms that new lending to investors continued to surge in January 2022, with an increase of 6.1% month-on-month, to be 67.8% higher than a year ago. This pick-up in investor activity is starting to reverse the trend of landlords selling out of the market that we saw through 2020 and early 2021.
Lending to existing owner-occupiers that are upgrading also remained high in January, the ABS data showed. However, new lending to first home buyers decreased by 5% in January. Although lending to first home buyers surged to new heights in January 2021, buyers today are still active, with new lending still around a third higher than it was pre-pandemic.
As investors return to the property market, we should start to see an increase in the homes available for rent, which is good news for renters who have struggled with the lack of suitable home options.
Buyer Confidence
Despite the talk of cooling markets, rising interest rates and COVID outbreaks, buyer confidence in the property market is yet to completely pause. A key measure of buyer demand hit its highest level in three years, while an indicator of new listings supply surged to its biggest result in eight years.
Realestate.com data indicates that views per listing in January were 41.9% higher than this time in 2021 and 48.2% higher month-on-month, representing the best result since 2019. In Queensland, search volumes in January were 13% higher year-on-year. Following several years of more modest growth, housing prices are still growing at a rapid rate in the Sunshine State, supported by better affordability and strong demand for interstate migration.
Outbreaks of COVID across the country seemingly haven’t deterred people from continuing to live their lives, including buying and selling property. As buyers regain their lost confidence, we can expect elevated levels of prospective buyer demand. Those who have held back from the market will now feel more encouraged to buy or sell.
Ipswich Market is on the Rise
Affordable towns and suburbs across Queensland have emerged as the shining stars of the property boom, with strong growth markets now emerging in some unlikely places. Seventy per cent of locations in regional Queensland have increasing sales activity, with a record 179 locations categorised as rising markets, including our very own Ipswich.
The Ipswich and south-western corridor have been substantial growth zones in the South East Queensland region for decades. Fuelled by the gentrification of Ipswich and the establishments of large-scale estates such as Forest Lake and Springfield Lakes, this corridor has become a focal point for affordability driven buyers looking to be a part of the market.
The city of Ipswich presents many opportunities worth considering for both local and interstate investors looking to migrate to the city. Known for its affordability, Ipswich can present an investment opportunity within reasonable proximity to the Ipswich CBD for below half-a-million, and it will have plenty of tenant interest. Looking at the rest of 2022 and there are still good opportunities for investing in Ipswich and enjoying strong rental growth plus low vacancy.
Whether you’re a beginner or an experienced investor, at times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s exactly what you get from the multi-award-winning team at Queensland Property Group.
In addition to our property development, we also help our clients grow, protect and pass on their wealth through a range of services including:
- Designing and managing investment portfolios
- Advising on property acquisition and development
- Building your wealth with the purchase of property
- Supporting you in buying your first home
- Planning for the future by designing strategies to help you reach your goals
- Managing your investments to ensure they are meeting your expectations
Contact our team today to get a Free Homeownership Assessment to understand your financial ability as a prospective buyer.