Four experts reveal property trends and predictions for 2022
Canstar asked four experts to nominate two trends they think we are likely to see in the property market in the year ahead. Here’s what they had to say.
Peter Koulizos
Two property trends that I feel will continue into 2022 and beyond relate to the residential and commercial property market.
As far as the residential property market is concerned, I think that the need for dedicated workspaces in the home will become a necessity rather than a ‘nice-to-have’. The pandemic fast-tracked flexible working arrangements. Before COVID-19, working from home was a luxury and many workers had to beg their bosses for this opportunity. Fast forward two years and working from home is now an expected work practice.
As more and more people will be working from home for at least some of the week, people will need dedicated workspace(s) in their homes. This could be just a nook off to the side of the kitchen or a purpose-built room that can easily be closed off from the rest of the house so as to make it quieter and more conducive to work.
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When it comes to commercial property, one of the big changes is likely to be the increased demand for industrial property, especially warehousing. If we go back in time to 60 years ago, we had large industrial estates as we manufactured many of our consumable goods and we stored much of it here. Then we moved the manufacturing of our goods overseas and they were also stored there. The warehousing in Australia was set up for ‘just-in-time’ delivery. In other words, we only needed enough goods stored here until the next shipment from overseas arrived. Enter COVID-19 and the subsequent disruption to our supply chains. We are now moving to a ‘just-in-case’ scenario where we will need to store more goods, just in case there is a disruption to our overseas supply.
Peter Koulizos is the Program Director of the Master of Property at The University of Adelaide and the author of several books.
Tim Lawless
I’m expecting the housing trends in 2022 will be quite different from the broad-based boom in housing values we saw through 2021. Last year, we saw CoreLogic’s national measure of housing values increase by 22.1% while this year the annual rate of growth is likely to scale back to single-digit growth, potentially around 5%-7% over the calendar year.
There are a variety of headwinds that will conspire to slow the market and create more diversity in conditions compared with last year including worsening housing affordability, rising mortgage rates and the potential for tighter credit policies. While overseas borders are set to open and migration to resume, this will probably have a more direct influence on rental demand, especially across the inner-city precincts of Melbourne and Sydney.
Regional markets, especially those with a blend of liveability and commutability should continue to show a higher rate of growth than the capitals as working from home policies become more entrenched.
Across the capital cities, it looks like Brisbane is in the best position to lead the pace of capital gains due to a strong demographic tailwind from interstate migration and better affordability relative to the larger capitals.
Tim Lawless is Research Director of CoreLogic Asia Pacific.
Jane Slack-Smith
2022 brings us to another year of disruption but not more of the same.
We know that Australia is not one property market and it follows that there won’t be one consistent property trend. We will not just see purchases decisions based on geography but also based on the way states and territories have handled the past two years. The political diversity has led to many people uprooting and heading to the country or the north or west. In fact, up until late last year, those in Western Australia may have been forgiven for their lack of understanding of what the eastern states had been through.
Hence, trends will be geographically specific but also 2022 brings a weariness. The frenzied home and second home buying are likely to subside.
For those who have experienced the most life-disrupting lockdowns, we will see that there is a silent acceptance. More and more people are just accepting that we will be living with this virus and life must go on. As a result, 2022 will be the year of nesting.
The need for bigger homes, zoning within homes and even the construction of separate additions – that is, the ‘third space’ between home and the workplace – will rise. As a result, we will probably see more construction and renovations in 2022. These third spaces will also be a place that the kids can come back to and somewhere family members can easily use to isolate in. They also have the potential to provide a secondary income – particularly during the immigration influx we are likely to see in the future.
Jane Slack-Smith is the Director of Investors Choice Mortgages and Your Property Success and a recognised commentator on the property market.
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Michael Yardney
We’re in for a two-tier property market moving forward. While most property markets around Australia have performed strongly so far this cycle (other than the inner city of high-rise apartment market), moving forward the rate of property price growth will slow and there are several reasons for this including:
- Affordability issues will constrain many buyers. The impetus of low interest rates allowing borrowers to pay more has worked its way through the system now and with property values being 20%-30% higher than at the beginning of this cycle at a time when wages growth has been moderate at best and minimal in real terms for most Australians. This means that the average home buyer won’t have more money in their pocket to pay more for their home.
- The pent-up demand is waning. While there are always people wanting to move house and many delayed their plans over the past few years because of COVID-19, there are only so many buyers and sellers out there, which will lead to fewer people looking to buy in 2022.
- Our financial regulator APRA is intent on slowing our markets using macroprudential controls.
Together these factors will lead to a two-tier property market – in other words, not all locations will grow at the same rate moving forward.
I can see properties located in inner and middle-ring suburbs – particularly in the more affluent areas and in gentrifying locations – significantly outperforming cheaper properties in the outer suburbs.
While the outer suburban and more affordable end of the markets have performed strongly so far, affordability is now becoming an issue in these locations. More than that, COVID-19 has adversely affected low-income earners to a greater extent than middle and high-income earners whose income returned back to pre-pandemic levels quicker. Many had not been hit at all.
And, as we start to emerge from our COVID-19 cocoons, another trend I think we are likely to see is a flight to quality properties with an increased emphasis on liveability.
During the past few years, FOMO (fear of missing out) led inexperienced investors and homebuyers to purchase almost any property that their budget allowed but as the market matures and buyers have an increased choice of properties for sale we will see a flight to quality with well-located A-class homes and investment-grade properties selling well, but secondary properties having trouble finding buyers.
As their priorities change, some buyers will be willing to pay a little more for properties with ‘pandemic appeal’ and a little more space and security. But, it won’t be just the property itself that will need to meet these newly evolved needs – a ‘liveable’ location will play a big part too.
Those who can afford it will pay a premium for the ability to work, live and play within a 20-minute drive, bike ride or walk from home. They will look for things such as shopping, business services, education, community facilities, recreational and sporting resources, and some jobs.
Michael Yardney is a director of Metropole Property Strategists and writes the Property Update blog.
Cover image source: Boon La Photo/Shutterstock.com
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