Ep 14. Property Market Trends for 2022
Looking ahead to 2022, Michelle dives into the emerging trends in the property market, and gives some insight into how to stay up to date with these trends.
Here’s what you’ll learn from today’s episode:
Which trends are emerging in the property market
Areas to look out for in Sydney
Which types of properties to keep an eye out for
Which demographics will cause the biggest shift in property prices
Speakers in today’s episode:
Michelle May - Michelle May Buyers Agents
FOLLOW US:
ENJOY THE SHOW?
Don’t miss an episode, subscribe via iTunes. If you like it, please leave a review!
Or, find us on the podcast app of your choice, such as Spotify.
This podcast has been recorded and edited by Cobalt Soundscaping
Please note that any views or opinions presented in this podcast are solely those of the speakers, and do not necessarily represent those of any business. These views and opinions are general in nature, and do not take account of your personal objectives, financial situation and needs. Please consider whether it applies in your circumstances and seek professional advice wherever appropriate.
Listen to the Episode Now
VIEW TRANSCRIPT
Hi, and welcome to the Buy Your Side property podcast. My name is Michelle and I know many of you are thinking that if this year has taught us anything at all, it's that you almost need a crystal ball to predict the future. But in this episode, I am going to have a crack at giving you my top 10, 2022 property market trends. So here we go.
My number one trend is the effect that the APRA announcement will have on the property market, in terms of borrowing. Obviously APRA has told the banks that they need to rein in their lending and it is going to be as much as 5% difference. So for those people who currently have a pre-approval, if that lapses they will be able to borrow 5% less, which particularly for first home buyers, this is going to have a big effect because, usually they're the ones with the smallest deposits as well.
Now, the ABS data showed us that the number of new loan commitments for first home buyers fell in the September quarter for the eight consecutive month. And that's obviously going to have a knock on effect further into 2022, and as a result, they are now down 27.1% compared to the same time last year. I think having all these price rises, of course, has made it more and more difficult for first home buyers to get into the market as a whole. But interestingly, the data also shows that at the same time as the first home buyers were leaving the market, investor loans rose 83.2%, which is huge. Now, as an effect of those changes, and just the price rises, I think that first home buyers who were still keen to get into the market will have to turn back to apartments. So whilst they were hoping to get a house, they're going to have to settle for something that is strata-titled. Hopefully a duplex or a nice apartment, because if they don't, I guess settle for that compromise, they risk renting for the much longer term because the disparity between apartment and house price increases has been quite significant.
Trend number two, I think is the fact that banks independently of APRA will be reassessing the way they lend, and serviceability expectations will be tightened and reigned in just to counter the risks in home lending. And this also then has a knock-on effect on the mortgage brokers, because they will have to really help their clients, guide them through the right direction in what they can borrow and the things they need to really seriously take into consideration. Looking at all parts of their spending and their current debts with credit cards and things like that.
Trend number three. I think that with the return of the open borders, there will obviously be a huge return of international students, but also the skilled labor immigration will restart. And with that I do believe that the apartment market that has been a little bit stale, particularly in the inner city will take off again. Both for buying as well as renting, because a lot of those apartments were built for that market in the first place, and I think they will now be snapped up because the population will be increasing again. Specifically also thinking about university areas, because obviously there's a higher density of students there, and likewise, as we see the rise in the skilled labour immigration, the other property choices are around, with apartments, with easy access to transport schooling and general amenity. But with that, I think that overseas immigrants are much more accepting of apartment living, because obviously in Europe, for example and in Asia, it's quite common for families to raise their children in apartments. This is not a prevalent thing in Australia, but with the rise of immigration, I think that will be something that we'll be seeing much more.
Trend number four is that obviously ex-pats with the return of the open borders will continue to come back and continue to buy big, and they will be buying the bigger homes. They were already doing this during the pandemic, but now they will actually be able to do this face-to-face, which will make purchasing a lot easier.
Now. Tip number five is the rise of the new Sydney hotspots in particular. We have found from having our feet on the ground that people are redirecting their efforts to areas that they previously would have not considered. And so you're seeing that urban spread from the Inner West is moving further West and South, and I'm talking about areas such as Bexley, Belmore, and Arncliffe in particular. Whilst they have seen exponential growth, more than 30% over the last year alone, they are still relatively affordable compared to other Inner West areas. So I think that as more and more people are going that way, what you're seeing is that a lot of young first home buyers/young families are moving that way and seeing like-minded people, at the station, on the playground, the hipster with a beard opening cafes. And that's really exciting because it's gentrifying and regenerating an area that you know has obviously been unbeknownst to a lot of and part of that is also the upgrade of the Metro line, where going on from Marrickville further out west, the journey is getting shorter and shorter. So if you do have to get yourself into the daily commute into the city, the areas further west are now really a viable option for the daily train commute. So I think that's a real positive.
Moving on to trend number six. I do think that, and we've already seen this in the last month or so, that the increased supply will thin out the buyer pool. And again, for buyers, that's a great thing, because a lot of vendors are looking to capitalise on the huge amount of growth over the last 18 months. So more and more listings will mean more choice for buyers and that means that there will be a relatively slower incline in future price rises. I think there will still be price rises, but just not to that same steep level as they have been over the past 18 months. Now, this means that you, as a buyer, you can just take a breath a little bit. You can be more discerning, you can really, take your time and just do your due diligence. Do your research and not jump into the wrong property too quickly just because there's nothing else. So I think people as a consequence, won't have that same FOMO, I hope that's what you're feeling right now as well that you just can take a breath and take it a bit slower. And I think just be patient as always, but I do think there's going to continue to be more stock on the market.
Obviously there's going to be a lull over the Christmas and summer holiday period, but, come Australia Day, that's usually traditionally when the big campaigns start again, but keep your ear on the ground in between that period also, because there's some great off-market opportunities always every year. But yeah, don't dismay. I think there's going to be lots more choice and as a consequence less competition per property. Which is fantastic.
Now my next trend is unfortunately that cash is still king. People with bigger cash reserves will continue to win in this market. So that means the first home buyers who are backed up by the bank of mum and dad, I read recently to an average tune of about $90,000. Obviously they are going to be able to have more buying power when it comes to auction as opposed to a first home buyer who's unassisted because in this time of COVID a lot of people have been losers, but there's been as many people who have created enormous amount of wealth and that have done very well professionally. And this is also part of what these big price rises in the market, because there's a lot of money in the market, and a big appetite to put that into property. Unfortunately you're going to be up against people who have the deeper pockets, but just make sure that you don't throw good money after bad first and foremost.
Now, again, my next trend is about Sydney. It is about the new Western Sydney airport. I think from a buyer perspective, it's quite an exciting development because obviously with a new airport, a new infrastructure, there is bound to be more property, and new property. And a lot of it means it will be more affordable because of the increase in supply in that area. The prices will be relatively stable, and so people will have more options to consider moving further out from the inner city suburbs, if they want that bigger piece of land, and obviously the connectivity to the city will be good because it's an airport which obviously they need to transport people in and out. So do consider your options if you're open to that obviously make sure that you do your due diligence when it comes to the developer and the builder, because just like with new apartments, you just want to ensure that there is quality in what you're buying and that you're also 100% across on when you're actually going to get the keys and all that kind of stuff. So do make sure you get a really good property solicitor to ask the right questions for you.
Now, finally, my last strand is about virtual buying. Whilst this is not a new concept, and in fact we as buyers agents have been doing this a long time with our ex-pats, it will continue for the ex-pats as well, of course, but also for people who aren't looking to immigrate. But also the sea and trees changes who are not local to where they are actually looking to buy. And I think that has been a consequence of COVID in particular, we've obviously had the lockdowns and agents were scrambling to still continue to transact property, and so a lot of new things came on the market such as Auction Now. We started exchanging contracts with DocuSign and those things are here to stay, and I think they are an added, welcome positive to the market because it's making it easier for you to inspect and transact in the property market. It doesn't mean that you have to skip your due diligence and I think it's very important that if you are buying virtually, you do have a professional on your side. That means not a real estate agent, because at the end of the day, the real estate agent works for the vendor, and not you as the buyer, no matter how nice they are, they are trained in objection handling and they are not really trained as a buyer's agent in the sense that they show you the good, the bad and the ugly. So if you are considering buying in a different state for example, really check everything, triple check everything. Because it is important that everything there is to know about the property before you actually sign on the dotted line.
But it is exciting, this virtual buying, it also means that, actually this week I had an auction where it was both in person, so out on the street. But there were also people bidding online through Auction Now. So it actually gives a really good vibe and it allows more people to participate. Particularly those who are still wary about COVID and going out and about. This is set to stay. So get on all those platforms, familiarise yourself with how they go because auctions for example, are nerve wracking. You don't want to be doing it for the first time when you're trying to buy the property of your dreams.
So those are my trends for 2022. Lots of positive news, I think if you're out there still to buy. But let's see, the property market is forever changing and look, I don't have a crystal ball, but this is what I think that's bound to happen for the next year. If you've got any questions for me, I'm always open to explaining stuff, helping you understand things that you may not have known about. So drop me a line at hello@buyyourside.com.au. Thank you for listening, and until next time.