Property prices skyrocketed in 2021 despite closed borders and, at times, severe lockdown restrictions brought on by COVID-19.
Ultra-low interest rates helped propel the market upwards to finish the year more than 22 per cent higher.
The latest CoreLogic figures revealed the average price of a home in Australia grew by $126,700 in 2021.
But recently, there has been chatter that the boom will be coming to an end. So, when can we expect that to happen?
Here is what the experts are predicting for property prices next year.
According to CBA, house prices will continue to rise next year and peak at around 7 per cent higher.
The average price of a house in Australia is around $995,000, according to Domain, so a 7 per cent increase would raise that to around $1,064,650.
The average price of a unit is around $609,600, so a 7 per cent increase would put that average at around $652,272.
CBA’s head of Australian economics, Gareth Aird, said this peak should happen around the middle of the year and then stay relatively flat for the remainder of the year.
Westpac has a similar outlook to that of CBA. It expects property prices to continue climbing in 2022, but identified a “swing factor” that could throw a spanner in the works.
“Investors look set to be a key ‘swing factor’ for housing from 2022 on, presenting upside potential near term if they return en masse, but also the potential for a more volatile cycle if this draws a more stringent response from policymakers,” Westpac said in its monthly housing report. So, while the major bank predicts property prices to increase at a much slower rate next year, a higher number of property investors entering the market could change that.
ANZ, much like the other major banks, is predicting price growth will ease in 2022 and then fall in 2023.
ANZ senior economists Felicity Emmett and Adelaide Timbrell said tighter credit, rising mortgage rates and increases in the stock market would dampen growth in 2022.
Affordability is expected to bite Aussies looking to buy a home after the extreme price rises we have seen this year, they said.
However, ANZ’s prediction is not quite as extreme as that of CBA or Westpac. ANZ believes prices will grow 6 per cent next year and only fall 4 per cent in 2023.
National Australia Bank is also taking a more subdued view for next year.
NAB revised its property price forecast to an increase of 5 per cent in 2022, as a result of low rates and strong income support beginning to fade.
“[We see] a very strong print for house prices in 2021 but a sharp slowing in 2022 as the impact of lower interest rates fades and affordability constraints begin to bind,” NAB said in its Q3 residential property survey.
The CEO of Metropole, Michael Yardney, believes the property market is not likely to fall, not next year and certainly not the year after that.
“Price growth – although certainly still positive – will be significantly lower over 2022 compared to the remarkable 2021 results,” Yardney said.
“Recent predictions of 10 per cent home price falls over 2023 based on forecasts of sharp increases in official interest rates are clearly nonsensical.”
Yardney said that an uptick in migration would also put more pressure on the housing market which would, in turn, keep prices higher.
“And the recent government announcement of a flood of 200,000 migrants set to enter Australia over the short-term will sharply increase demand for currently available jobs,” he said.
“And of course, a quick return to high migration levels will again place upward pressure on home prices in our still-undersupplied housing markets.”
Source: Yahoo Finance AU