John McGrath – Market strength to continue in 2022
As the world continues to deal with the challenges of the pandemic, there is reason to feel confident that positive momentum and price growth in the Australian property market will continue in 2022.
We saw incredible price growth last year, with Australian home values up by a national average of 22.1%, according to CoreLogic. We saw a rare trend in both metro and regional home values rising at a similar pace and at the same time.
Here are 5 reasons why I believe we will see the residential market in most parts of Australia continue to perform well throughout 2022 and beyond.
Impact rating 6/10
Actually, I think most have realised there will be no “post-COVID period” as we now move forward accepting of living life with COVID and seeing it as more or less another illness. We saw people and businesses more energised post-lockdown until Omicron reared its ugly head. But as vaccines, boosters and herd immunity all kick in, we should find ourselves on firmer footing to re-start life as we knew it before COVID came along.
Overseas borders re-open
Impact rating 5/10
As double-vaxxed expats and overseas immigrants can once again travel to Australia, we will see an increase in investment in residential property. COVID has reinforced for many the benefits of living Down Under and also made many people re-prioritise their health and family over other things. So, stay tuned for an increase in overseas buying over the next 24 months. Historically, most of these funds find their way into the Sydney and Melbourne markets, but following the Brisbane Olympics announcement, I suspect South East Queensland will also be a strong recipient of this overseas investment. The return of international students, in particular, is likely to give inner city apartment rents and values a boost.
Impact rating 7/10
Governments around the world have started to issue bonds to fill the economic black holes in their budgets. This will allow them to continue to pay for COVID-related activities and stimulate their economies. This will also provide cash and borrowing capacity for banks, businesses and the entire community. Most experts agree that this will have an inflationary impact. Traditional winners inside a more inflationary environment are property and shares, so we are likely to see a lot of cash finding its way to blue chip investments. So, the increase in demand as people upgrade their homes and invest in residential property will continue to keep prices healthy. Cash will be less valued and prime assets will be the winners.
Impact rating 7.5/10
No doubt the Federal Government will have a few positive surprises for the Australian public in the next few months as we approach the election (which must be held no later than May 21). Data is suggesting that despite COVID, there will be a very healthy set of economic numbers delivered this quarter – jobs, GDP growth etc – which will be well-received and provide a solid base for future growth.
Impact rating 3/10
Whilst this is a slower burning contributor to the property market, as the Baby Boomer generation (generally 60-70 years of age) moves to a new phase of life, this will create a stimulation in property moves and investing due to the passing down of generational wealth to their kids.
So, whilst all these factors are no guarantee of a strong property market, the indicators suggest not only will prices hold at these levels moving forward, but ongoing pressure is likely to increase prices further throughout the year in most markets.
I wish you all the best with your property goals in 2022.
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