Here's what to expect for the housing market in 2022

Home buyers have reasons to be optimistic despite threats of Omicron

Here's what to expect for the housing market in 2022

News

By Micah Guiao

2022 will likely see easing in the pace of capital gains, according to Tim Lawless, data analyst at CoreLogic.

The pent-up demand from previous years resulted in new record highs for home sales despite mediocre listings and increased emigration. Because of this, Lawless said vendors have long had the upper hand when it came to negotiations.    

“The final months of 2021 saw housing values move through the fastest rate of annual growth since the late 1980s at a time when wages and household incomes hardly moved,” Lawless said. “Nationally, homes were selling in 23 days early in 2021 with minimal negotiation on advertised prices, auction clearance rates were holding in the high 70% to early 80% range across the major auction markets and buyers were often experiencing a nasty case of FOMO.”

However, there have been strong hints of a buyer’s market in recent weeks, with housing values only increasing by 1% higher in December. This is due to the surge in property listings, which has begun to balance the market and ease buyer urgency, resulting in cut prices from vendors way into 2022.

Property listings in both Sydney and Melbourne have soared in recent months, according to Domain. The Parramatta region saw the biggest jump in November, recording an 88% increase from its number of listings in September, when the city was still in lockdown.

Meanwhile, Melbourne’s inner south – Hampton, Brighton and Sandringham – experienced the area’s largest increase at 67%. With lessened competition for homes, more than one in seven vendors in Sydney’s premium suburbs were found to have sliced asking prices by $203,315, Domain reported.

The surge in listings was in large part due to delayed plans to sell when open houses and public auctions were suspended, which some experts say could once again be the case with Omicron in the picture.

If this were to happen, home buyers still have reasons to be optimistic. Lawless said such a case will also “prolong expansive monetary policy and low interest rates, which helped sustain housing demand through 2021.”

Ultimately, Lawless believes housing values will continue to rise in the short term, even amid concerns of an early lift in interest rates and tightened credit policies.

“Even if interest rates rise earlier than expected, it is likely to be a gradual process,” Lawless said. “The cost of debt is likely to remain well below long-term averages, continuing to support housing demand for an extended period of time.”

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