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The executive chairman at Raine & Horne is anticipating 10 per cent growth in property prices over the coming year.
He has made the prediction: “While it is fair to expect that the pendulum will swing back towards buyers in 2022, we are very confident that given a variety of factors, the Australian real estate market demand is very deep, and this will underpin growth of 10 per cent for Australian real estate in 2022.”
Those factors include growing buyer confidence, continuation of record-low interest rates, a “war chest of savings”, and the federal government’s commitment to bring permanent migration numbers up.
Here’s how Mr Raine is expecting each of those factors to impact the property market:
Increased consumer confidence
According to the executive chairman, evidence of 2022’s buyer confidence is already coming to the fore.
“Our research shows that appraisals were up 51 per cent in November 2021 compared to the same month last year,” he began.
“This indicates that many Australians are now more confident that we can live with the pandemic and are considering a home sale or rebalancing their investment portfolios in 2022.”
Across November, property listings were also up – by more than 22 per cent in November 2021 compared to November 2020.
In Victoria, confidence is alive and well, with listings up by almost 60 per cent. South Australia is not far behind, with Mr Raine noting listings had increased by 45 per cent in November year-on-year.
Interest rates to stay low
According to the executive chairman, the federal government’s Mid-Year Economic and Fiscal Outlook (MYEFO) was “chockful of good news on employment and a lower than the expected budget deficit”.
Yet, he has acknowledged it is still highly unlikely that the official cash rate would be revised over the coming year.
“Similarly, even after lenders have increased fixed rates in recent times, there is still outstanding value if you lock into three-, four- and five-year fixed rates over a 25-year mortgage where it’s possible to find loans charging less than 3 per cent,” Mr Raine contended.
As a result, he’s expecting “plenty of buyers to continue to take advantage of the low interest rate environment in 2022”.
‘Savings war chest’ will underpin demand
Throughout the pandemic, Australians have managed to collectively save $240 billion, Mr Raine noted, citing CommBank’s HIS Index for November.
Adding to the positivity, the ABS is reporting that more than one-quarter of all Australians – or 26 per cent – are expecting their household income to increase.
With 11 per cent also indicating their expectations to build or buy a new home, Mr Raine sees “a massive pool of property buyers waiting to pounce”.
“This is a massive and growing war chest of savings, and we expect a large slice of this money to find a home in real estate,” he forecast.
“With cash accounts paying next to nothing, while the share market will continue to be impacted by every new COVID strain such as Omicron, the smart money will find its way into real estate.”
Permanent migration will power property
Highlighting the government’s pledge to increase permanent migration to around 160,000 people per year, Mr Raine sees such an intake as “the growth insurance policy for the property market”.
“Throwing open the borders will be a positive for real estate markets,” he stated.
“During the pandemic, international borders were slammed shut and overseas buyers weren’t allowed in, yet the Australian market was still able to boom with growth of over 20 per cent over the last 12 months alone.
“With the reopening of international borders, I’m not going to say that there will be another mega boom, but we expect vendors to enjoy very good results in 2022.”
The rural and regional real estate splurge will continue in 2022
In 2021, combined regional real estate markets across Australia achieved growth of 25.2 per cent compared to a combined capital city return of 21.3 per cent over the year to 30 November.
According to Mr Raine, this is not slowing.
“In 2022, this regional and coastal shift will continue, with more Australians not simply moving suburbs, but they’ll move to new regions,” he said.
Taking all of the above into account, Mr Raine concluded by saying, “there’s also an old saying in real estate that you only need one buyer to sell a property, but most markets still have plenty of buyer depth, and this will underpin decent price growth in 2022”.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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