My predictions for 2022
There has been much hype in the media about surging residential house prices in Australia over the last 12 months. Affordability being reduced , first home buyers unable to gain a foothold and comparisons between the 2021 cycle and other periods of growth such as 1989/90, 2010 and 2017. I have been studying these property cycles for the last 30 years. As Chairman of WBP Group one of Australias largest independently owned property valuation companies and as a leading Property Buyers Agent I have a particular view on this cycle and where it could go next.
Lets look at some of the cold hard facts. The 2021 upward growth cycle is young having run for 4-5 quarters. Historically, upswings can be larger albeit at lower rates of growth.
What I have observed from the ABS annual property price statistics is the following :-
Melbourne Property price growth has outperformed Sydney between 2017 and 2021.
Sydney Melbourne
| Sydney | Melbourne | |
|---|---|---|
| 2017 | +3.8% | +10.2% |
| 2018 | – 7.8% | – 6.4% |
| 2019 | +3.7% | +4.1% |
| 2020 | +3.7% | +2.9% |
| 2021 | +25.4% | +19.5% |
| 5 Yr | +28.80% | +30.30% |
| 5.76% p.a | 6.06% p.a |
| 2017 | +5% | (Last Peak) |
| 2018 | -5.1% | (Federal Election) |
| 2019 | +2.5% | (Post election recovery) |
| 2020 | +3.6% | (Covid year) |
| 2021 | +21.7% | (Record growth year) |
| 5 Yr | +27.7% | |
| 5.54% p.a |
Key Drivers and Risk
- Supply is the root cause. We have not overbuilt. This is not a speculative investment boom.
- Unemployment is expected to remain low
- Interest rates are expected to remain low by historical standard. This needs to be watched carefully as I would not be surprised to see the banks raise interest rates this year ahead of the RBA
- The opening of international borders, influx of skilled migrants and return of backpackers and overseas students will underpin future property price growth
- Return of large numbers of Expat Australians in last quarter of 2021 will be searching for property in the first half of 2022
- Federal and State elections (In Vic ) will cool the heals of property in 2022
Are You Thinking of Buying or Selling In 2022? Contact Greville Pabst today on 03 9589 3886.
