By Stockdale & Leggo
THERE has been a lot of talk about what is in store throughout 2022 for the property market.
Of course, the market is always going to be affected by the decision of the RBA and the banks; but what exactly does that mean for existing homeowners, those looking to get into the property market and investors looking to expand their portfolio?
Despite the constant lockdowns of 2021, the property market has continued to thrive and grow at record-setting rates, with most major cities sitting in the double digits of property growth percentages. While a number of people have predicted a property market crash, the trends and statistics show that while growth may eventually slow down, a crash is unlikely.
However, most believe that 2022 is the year we will see the market start to slow down and head towards a downturn.
But the question is why, and there are a number of factors to this:
1. APRA (the Australian Prudential Regulation Authority) is intent on seeing our markets slow down with the use of macroprudential controls.
2. Demand is waning: With the cost of houses having climbed so high so quickly, many have forgone their dream of owning a home and made the decision to wait. Should the banks start to increase interest rates, this only forces these buyers further out of the market.
3. The banks: With changes implemented on borrowing and how it is calculated, the banks have been given a big shake-up and tightened up their loopholes, pushing many buyers back out of the market.
This is not to say that all property markets will go down, instead Australia will likely be split into a two-tiered real estate market, with certain areas maintaining their growth at a steady and consistent pace, while others will see a downturn, but perhaps not as drastic as since in past markets.
After COVID, many people are seeing their priorities change, where some will be willing to sacrifice more to pay the extra and secure their dream home and others will choose to spend their cash elsewhere rather than compete in a challenging market.
At the end of the day, the truth is, these changes are unlikely to come into effect until late 2022, early 2023, unless APRA tightens the availability of credit with the banks sooner. While the current growth levels are unsustainable long-term, 2022 is still going to see high demand for housing and a market definitely in favour of the seller.