While it’s certainly been an interesting period for Australia’s property market, both buyers and sellers alike are pondering what the future may hold.
On a national scale, home values are currently up over 20% when compared to the same period just twelve short months ago. Considering the change in spending habits, shortage of building materials and just about everyone in the nation reevaluating the quality of their lifestyle, buyers in particular have stimulated the Australian property market in surprising numbers.
While this spells good news for most sellers, skyrocketing house prices are linked to a number of factors such as record low interest rates and a lack of properties for sale to meet buyer demand. However, the latest forecasts combined with industry speculation have hinted that property prices may soon begin to finally stabilise, with first home buyers in particular feeling cautiously optimistic about finally getting their chance to enter the property market.
Australian Property Market Predictions For Next Year
Many would argue that it’s the record low interest rates that drove the property boom to the dizzy heights that it’s currently at now. With limited supply and ever increasing demand, in October 2021 the Australian Prudential Regulation Authority (otherwise known as APRA) took steps to help ensure that borrowers were capable of making mortgage repayments if – or perhaps, when – home loan interest rates rise.
FOMO – or “fear of missing out” – is another driving factor to consider when assessing the state of the Australian property market. With auction clearing rates at record highs and properties going under contract before they’re even publicly listed are driving borrowers back to their banks to lift their pre-approval amounts, with some taking on more than they can potentially afford to repay.
As such, the recent changes also mean that lending providers are scrutinising the debt to income ratio of borrowers more than ever, purely to ensure that they can still repay their home loan when interest rates inevitably go up. These changes also mean that the maximum borrowing capacity for the average person will reduce by around 5%.
However, the Reserve Bank Of Australia governor Philip Lowe has also indicated that until inflation and wage growth stabilises, an interest rate hike is unlikely to be seen before the end of 2023. As a result, many of the big banks have avoided any dramatic changes to their interest rates for now, with Westpac’s latest outlook predicting property prices will rise 8% in 2022, before falling by 5% in 2023.
If house prices are expected to peak in early 2022, it’s Brisbane that is set to receive the lion’s share of the current boom. When compared to it’s capital counterparts Sydney and Melbourne, Brisbane is seen as the more affordable option served with a lifestyle that’s been relatively lockdown free. Expats from the southern states have only helped to drive this as well, with interstate migration from New South Wales and Victoria also sitting at record highs.
For buyers hoping to see the property market simmer down in the year, there are a number of other factors that may see this happen outside of inflation, wage growth and interest rates. Falling house prices will also be linked to the tightening of lending criteria, increased interest rates, decreased affordability, state and international borders reopening, the construction boom stabilising, and the end of government stimulus packages. While this is unlikely to happen until at least the end of 2022, it spells good news for buyers who have been looking for a light at the end of the tunnel.
Should you be looking to sell your home or purchase a new one, enlisting the services of a free property advisor like ESPA can often be a game changer. As an example, your advisor would likely research the property, local agents, check the zoning, evaluate market conditions, and communicate clearly with you regarding all of your options – but where do you find one?
Take The Stress Out Of Selling Property
As a completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.
