The general Australian property market prediction is that foreign buyers and expats returning home to Australia will be the dominant market for property in the future. However, this may change as the market slows down in 2022.
The best cash buyers, such as investors who have made a lot of money or people with equity in other properties, will be able to purchase the best property. They also have patience and can play long games.
According to figures, one in seven homes sold in Australia between 2020 and 2020 was purchased by someone from overseas. This number will increase as more Australians return home after opening the borders.
While many are concerned about the Australian property bubble (predicted to burst in 2023 and fall by 10 to 12%), foreign investors will most likely be happy to accept the early loss to secure the property for the long term. That is despite the Australian property bubble being a “Lalaland”, where agents and sellers continue to demand exorbitant prices. ).
Here’s a quick rundown of the.
Predictions for the Australian property market in 2022
1. In 2022, prices will reach their peak
When you thought that prices wouldn’t rise, they do! Analyst’s housing market predictions predict prices could increase another 5% in 2022 before peaking and settling towards the year’s end. Local investors and first-time homebuyers are leaving the area. Housing affordability is more complex than ever, with prices increasing by more than 20% in certain areas. If only wages could rise as quickly.
The low supply of housing stock, low-titled land, and difficult-to-get materials have contributed to the huge price rise. 60% of economists now believe opening international borders will increase prices as international investors revitalize the market.
The market will open again once we have gotten rid of lockdowns. It will take time to return to normal, so 2022 will be a quiet year for sales commissions. It will be difficult for home builders and sellers to return to normal in 2023 or 2024 after a pandemic.
2. Borrowing and interest rates
For now, borrowing is still cheap. Lenders have been asked to consider a rate increase and provide a minimum of a 3% “serviceability” buffer. That allows those with higher incomes, or better financial positions, to bid at auction and receive financial approval.
The 2023 market crash and lull will force banks to value properties conservatively. Over two-thirds of economists (42%) believe there has been an increase in banks refusing loans due to the final auction prices being greater than their internal valuation. Without a large deposit of cash or equity from other properties, it is impossible to get a credit loan.
3. Auction success
Many sellers and vendors are now rushing to sell their houses while still believing in the current market price. That is a good deal for the riskier and more savvy investor. They will bring their 10% deposit and then some. Many auctions go well over asking.
Young couples and families cannot compete with cash-strapped expats from the Middle East and the US looking to exchange the dollar for their assets. These foreign buyers have all the cards and are eager to take action. The third busiest week for auctions was November 1, with 75% or more clearances.
4. High prices are a concern, but returns can be positive.
Although rental returns have not kept pace with skyrocketing prices, they have seen their highest growth since 2008. The September quarter saw national rental rates rise 8.9% year-on-year, while regional rentals rose 12.4% for the same period. The average gross rental yield in capital cities was 3.9%, while it was 4.4% for regional areas. That is an average of 3.3% for Australia but could be much higher for hotspots in the region.
That is better than term deposit returns of almost nothing and less risky as the Australian sharemarket continues to decline. Investors may find that paying more for bricks and mortar in Australia is the best way to put their money.
It’s a war for renters; make no mistake. It isn’t easy to find an affordable rental in this market. The rental vacancy rate has been low and is currently at 1.7% for the past six months. Finding tenants and eliminating vacant properties should not be difficult.
Will the Australian property market will crash?
All indications point to a resounding “No”. The Australian property market will recover, according to experts. There won’t be any big winners or, more important, losers with any luck.
The Australian property market will be supported by foreigners and expats next year, with domestic investors and first home buyers taking a backseat. It will soon return to normal in an open and free market with a few price drops and rate adjustments by 2023.
If you are a cash buyer from abroad, you will be laughing the whole way to the bank. You have the opportunity to protect your portfolio against very little competition. But you must be prepared to spend a lot!
Disclaimer: This blog post contains general information and opinions that should not be relied on. This blog post does not consider specific facts, situations or circumstances. We do not offer any tax, legal or financial advice, and your accountant should provide tax advice specific to your case.