Following Australia's record-breaking housing boom in 2021, relief is on the way for buyers in 2022 as the house price growth rate continues to cool off at the back end of the year.
Despite easing buyer demand, Domain's End of Year Wrap Report noted all capital cities bar Hobart ended spring 2021 higher than the three year average.
Domain notes the traditional spring to summer real estate dip brings with it an average drop of 11% over the past three years, however the start to summer this year has been unusually strong.
Chief of Research and Economics at Domain, Dr Nicola Powell, said the year is closing in a different position to the start with sellers re-engaging with the market and increasing supply.
"While it remains a sellers' market, slowly market dynamics are changing to provide more favourable conditions for buyers,” Dr Powell said.
Moving into 2022, buying opportunities are looking bright with Domain’s report noting appraisals soared across the final quarters of the year.
This indicates that a number of homeowners are considering the state of the market and listing their properties for sale in the new year.
Domain notes similar predictions to the big four banks, with prices not expected to rise at the same pace next year.
This comes off the back of tighter lending conditions reducing buyer leverage and wages growth not keeping pace with price growth.
Trends forecast for 2022
Coastal locations are tipped by Domain to be the areas most sought after by Australians, honing in on areas that are affordable and poised for future growth in 2022.
This is reflective of property trends throughout 2021, with beaches, pools and waterfront locations the idyllic property features Australians crave.
Source: Domain
Dr Powell says investors will continue to be a growing market segment, unless APRA puts on the brakes.
"Investors have had the benefit of rising rents and equity growth, with prices set to continue to rise - albeit at a slower pace
than 2021 - investors will continue to chase it," she said.
"It remains a landlords’ market across the most major cities and into regional Australia."
Domain reports regions such as inner Melbourne and Sydney’s City and East historically have a high level of overseas migration and student population, yet will be susceptible to a tightening rental market once international borders fully reopen.
Dr Powell notes population growth is likely to be a government focus in 2022 and beyond to sustain higher economic growth and build Australia’s skilled workforce.
"The return of overseas migrants, international students and particularly skilled highly-paid migrants, will add to demand for housing," Dr Powell said.
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Image by Susann Schuster via Unsplash.
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