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Australias Top 5 Residential Property Market Trends In 2022 2

Residential property is among the best investment options you can try. For one, profits are almost guaranteed with simple residential property, meaning you can generate reasonable passive income for dozens of years. Also, it continuously increases in value, unlike other investments, which depreciate with time.

Another perk of residential property investment is the complete absolute ownership you gain. You have the freedom to spruce up the interiors and exteriors whichever way you want. And you can revamp things whichever way you please. Not only that, but you can also sell, rent, or renovate it. It’s not restrictive like apartments or shops, which don’t offer flexibility in renovations. You must accept the property as it is.

Before investing in this area, it’s good to get a glimpse of the market trends. It gives you an insight into what you should expect and enables you to make better decisions. With that in mind, here are Australia’s top five residential property market trends in 2022:

There is a rapid increase in rent prices

Australian economists and other property market predictors say rent prices are forecasted to increase by 10% in the following year. One of the major causes of this rapid rise is international migration. As you know, the Australian border was closed in the past two years due to the pandemic. However, in January this year, the government opened the borders to vaccinated international students, tourists, business people, etc. This means that the demand for houses is higher than the supply.

Another thing is that there’s a prediction by the big four banks that interest rates and residential property GST (Goods and Services Tax) will increase in 2022. It’ll prompt investors to increase rental prices to manage the high loan repayments.

First home buyers have reduced in the market

The number of first home buyers has decreased with Australia’s gradual increase in home prices. Thus, the residential property market faces a bleak future. In 2020, the mean cost of residential houses was AUD$876,100, while in 2021, it was AUD$920,100. This price has also increased in 2022, making it challenging for first-time home buyers to save for deposits. Also, with the end of subsidy programs that lowered the total amount savers required to make, first home builders have found it challenging to afford title residential property, thus causing many prospects to abandon their dream of owning homes.

In addition, investors keep entering the property market, increasing prices. First home buyers can’t compete with them as they’ve established equity and relatively lower loan-to-value ratios.

Property prices have drastically increased

Residential property value is affected by interest rates, real income, the state of the economy, and changes in the size of the population. Interest rates affect the cost and demand of real estate. Low interest attracts more buyers, increasing demand and thus inflating prices.

Australia’s population has increased over recent years. According to a census conducted last year, there were 25,422,788 people in Australia, excluding foreign visitors. This was an increase of 8.6% from the 2016 census. In effect, this has resulted in high house demand, thus increasing property prices.

Upgraders have dominated the property circle

Most Aussies are upgrading their lifestyles by investing in better residential property Australia. They’re moving from small, unappealing apartments to spacious ones with minimal rental units. On top of that, they’re looking for houses with parking spaces and wholesome, well-to-do neighbourhoods. Also, homeowners are advancing to more extensive, better homes with outstanding surroundings.

Properties in cities are in demand

Another top residential property market trend is the shift of home buyers and tenants from suburbs to cities. Most people moved out of cities to the suburbs during the pandemic outbreak. According to data by the Australian Bureau of Statistics, Australia’s capital cities had a net loss of 11,200 people in the September quarter of 2020. However, this year people are resuming their workplaces in the cities, thus increasing the demand for houses. Similarly, zoned commercial residential property operators are rising to manage the considerable influx of home-seekers.

Conclusion

Staying up-to-date with market trends is vital to the success of your residential property business. Market trends act as a compass to business prosperity. Once you know the type of houses tenants demand, the kind of environment they desire, and the direction in property prices and rental prices, you can invest in properties that meet your target audience’s demands. This way, you’re sure your property will attract tenants quickly and even home buyers if you may need to sell. You may use the above trends to make enlightened decisions on the year’s remaining months and beyond.

References

⦁ “Even with a historic fall in house prices, rents are tipped to rise by as much as 10 per cent. Will they ever go down?”, Source: https://www.abc.net.au/news/2022-08-02/house-prices-falling-but-rents-tipped-to-increase-10-per-cent/101288418
⦁ “Strongest annual growth in property prices on record”, Source: ⦁ https://www.abs.gov.au/media-centre/media-releases/strongest-annual-growth-property-prices-record#:~:text=The%20value%20of%20residential%20dwellings,in%20the%20September%20quarter%202021
⦁ “Factors that affect housing market”, Source: ⦁ https://www.economicshelp.org/blog/377/housing/factors-that-affect-the-housing-market/#:~:text=The%20housing%20market%20is%20influenced,be%20determined%20by%20available%20supply
⦁ “Population”, Source: ⦁ https://www.abs.gov.au/statistics/people/population#:~:text=The%202021%20Census%20counted%2025%2C422%2C788,cent%20since%20the%202016%20Census
⦁ “ABS data confirms a city exodus during COVID, with biggest internal migration loss on record”, Source: https://www.abc.net.au/news/2021-02-02/abs-data-confirms-city-exodus-during-covid/13112868

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