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2021: It's a wrap! Property market predictions for 2022?

The last 12 months have dished up plenty of surprises. We look back on 2021 – and see what the New Year could hold for your home, your mortgage and your property plans.

CoreLogic data revealed that Australian housing values were 1% higher in December 2021 than a month earlier, slowing down from a 1.3% rise in November 2021.


The growth momentum slowed down sharply in Sydney and Melbourne. Both cities recorded their softest reading since October 2020. A surge in fresh listings took the heat off in these cities.


But there were no signs of slowing growth in Brisbane, Adelaide and regional Queensland. CoreLogic research director Tim Lawless explained, “These regions show less of an affordability challenge relative to the larger capitals, as well as better support for housing demand with Queensland, in particular, showing strong interstate migration. Additionally, we haven’t seen the same level of supply response seen in other regions, with the trend in advertised supply remaining well below the average in these markets.”


What Happened To The Property Market In December 2021?

  • Housing values across regional Australia were up 6.4% in the three months to December, compared with a 5.1% rise in the September quarter.

  • The upper quartile of the property market led the growth slowdown. Across the capitals, the upper quartile values were up 2.6%, compared with a 3.7% rise in the lower quartile and middle of the market.

  • The number of new listings added in December was 21.4% higher than the five-year average. This demonstrated strong vendor confidence, quick selling times and high auction clearance rates. Buyers benefitted from more choice and reduced urgency.

  • Gross rental yields fell to a record low of 3.2% in December. Every capital city except Perth and Darwin had record low yields. Sydney and Melbourne experienced the lowest yields, at 2.4% and 2.7%, respectively.

It was an unprecedented year for Australia’s property market. Even with low stock levels, CoreLogic estimated 653,000 house and unit settlements over the calendar year. This is the highest number of annual sales on record.


As we usher in the new year, let’s see what 2022 might have in store for the property market.


Property Market Predictions For 2022


According to CoreLogic, in 2022, property prices will continue to rise at a lower rate. First home buyers could be priced out, while investors might turn their attention to rental yields once borders reopen.


Alan Hemmings, CEO of Home Loan Experts, further adds, “I do expect price increases to continue, even with more stock coming onto the market. We should see migration increase, which will continue to drive competition for property and keep prices up.”


House Price Predictions 2022

The big four banks all forecast a rise in property prices in 2022. ANZ forecasts a 6% rise in values before a 4% drop in 2023. CBA expects house prices to rise 7% in 2022 and forecasts a double-digit drop of 10% in 2023. NAB forecasts values will increase by 4.9% before a 4% fall in 2023. Westpac expects an 8% rise in 2022 and a 5% correction in 2023.


Low mortgage rates fuelled a FOMO frenzy, and house prices do not decrease until interest rates increase. But some analysts predict that the cash rate could rise in 2023, not 2024. Banks have already started hiking their fixed rates and are cutting their variable rates.

The Return Of Investors

Many analysts are predicting that once the international borders reopen, international students and skilled workers will drive demand for apartments. Investors will return to take advantage of rental yields. As rental demand increases, vacancy rates will fall, and rents rise. Rental demand will increase in inner-city precincts popular with students and workers.


APRA’s Housing Intervention

Hemmings says: “Whilst APRA implemented an increase in serviceability buffers late last year, their impact will be felt this year, particularly in a rising market for fixed rates. It acts as a double hit – higher buffers and higher rates will mean clients cannot borrow as much as they did last year. This will have a slowdown effect.


“Should we continue to have a hot market, other measures may be implemented, particularly if investors come back into the market aggressively. Caps on LVRs and interest-only loans have been used previously and could be reinstated.”


Regional Market Will Continue Growing

Since March 2020, housing values across regional Australia were up 32%, compared with a 20% lift for combined capitals. The most popular regional markets experienced a rise of more than 30% over the calendar year. The Southern Highlands and Shoalhaven recorded the highest increase in home values at 37.7%, followed by Sunshine Coast at 33.7%.


There will be a disparity between the performance of capital cities and regional markets. Regional markets will benefit from higher demand, especially those with a lifestyle appeal, as remote work policies become normalised. There will be demand for holiday homes.


A Buyer’s Market Emerging

In 2021, buyers had limited choice, as less housing stock was on the market. CoreLogic predicts that as new listings continue to increase, buyers will have more properties to choose from. The average time on the market is beginning to increase, and it will take longer to sell property.


However, first home buyers will have to overcome the hurdle of saving a bigger deposit while prices keep rising. According to ABS lending indicators, first home buyers’ loans declined by 11% in 2021.


Cost To Build Will Increase

Hemmings notes the impact the rising price of construction will have on prices. “Another issue for new homes is the cost of raw materials,” he says. “Supply-chain issues are causing the cost of building new homes to grow. These costs will be passed on to customers.”


Should I Buy A Home In 2022?


The best time to buy a home is subjective, depending on your circumstances. While it is better to buy when property prices aren’t increasing, there is never a wrong time to purchase if you can afford to buy. With property prices predicted to rise in 2022, buying sooner is better.


If you keep waiting for the right time to buy, you could:

  • Lose the opportunity of buying your dream house

  • Be priced out of properties you could previously afford

  • Miss the advantage of the lower interest rates

There is no guarantee that property prices will fall in 2023. Despite experts and analysts’ best predictions and forecasts, the pandemic is the biggest wildcard. If cases keep rising, border restrictions could disrupt home-buying plans.


At MyFN, our mortgage experts can help you get your finances in order so you’re prepared to buy a home you can afford. Contact us today and to see how you can put your property plans into action in 2022.