Now that we have entered a new year, many people are wondering about the outlook for the Australian property markets in 2022 and beyond.
Despite a multitude of challenges including prolonged lockdowns due to Covid-19, Australia witnessed an unbelievable level of property value growth in 2021 with Sydney house prices rising over 25.3%, Melbourne 15.1% and Brisbane 27.4%. Several factors fuelled this boom, including record low interest rates, limited housing supply and returning expats who purchased property. Then there were the numerous Government grants and stimulus packages that propped up the economy and a large infrastructure boom underway.
Moving forward into 2022 however, not all locations will continue growing strongly, in fact it’s highly likely that Sydney and Melbourne’s property sectors will soften significantly this year and may even regress slightly.
Four key markets are set for solid and sustained growth
As always, some cities will do far better than others in the property growth stakes depending on where they sit in their growth cycle and other key property market fundamentals. Adelaide, Brisbane, Canberra and Perth are currently the markets with the best prospects for property investors. In most cases these markets also have 2-3 times net rental return than the Northern Beaches of Sydney.
Adelaide has a number of factors that make it a strong investment opportunity. There’s low supply and pent-up demand, as well as strong projected population growth. It’s a very liveable city that’s well on the affordable end of the spectrum with median property prices over the last year ranging from $750,000 for houses to $425,000 for units. With $100b in government defence, infrastructure and other investments, Adelaide should be firmly on the radar of savvy investors for this year.
Brisbane’s property values will continue to strive ahead over the next year, thanks to better affordability, more demand, and less supply. After a period of little growth, Brisbane finally hit its stride to become Australia’s strongest housing market with dwelling values 27.4% higher over the year.
Brisbane has seen an influx of people moving in from higher-priced markets such as Sydney and Melbourne, and the economy is performing nicely with a substantial number of game-changing major infrastructure projects underway. Growth in Queensland’s capital will continue into the long term as well, thanks to their hosting of the 2032 Summer Olympics.
Since the pandemic, Canberra house prices have risen a huge 30.9% and unit prices 9.4%, which is the highest rate of growth across all of Australia’s cities. Canberra will continue to be one of the steadiest markets in the country this year, largely due to its robust economy, job opportunities, and the highest median income anywhere in the country. Canberra also has the strongest rental demand of any capital city in the country, which will help to attract future investment demand.
The price differential between houses and units is the largest it has ever been, with the median house price $1,074,187 and the median unit price $528,950. When the price gap becomes so large, history shows us that unit demand increases and prices along with it, especially when rents are so much higher for units .
In 2021, the Perth property market transformed from recovery to boom in the space of a few months, following a long flat period after the last resources boom in the area from 1992 to 2007. In the 12 months to March 2021 Perth houses rose 15.4% and units 9.6% with many suburbs already about 10% above their previous peaks.
The WA Government has approved new measures to streamline construction contract approval processes and expedite $140 million of road and maritime projects. Other major infrastructure project investments are also getting a boost under the Western Australian Government’s WA Recovery Plan. Investments in defence, port and harbour infrastructure, and serviced land to help establish new business and research facilities will deliver a strong pipeline of jobs for Western Australians with a total value of close to $27.1 Billion over the four years to 2024.
When you consider that select cities (and even suburbs) are forecast to grow 60 – 100 per cent more than others over the next 7 years (on a property valued at $1m that equates to $600,000 – $1m), it pays to seek the help of experienced, qualified property investment advisers that have on-the-ground knowledge and strong research of these areas.