Risks and opportunities for investors in 2022: BuyersBuyers report
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We're coming to the end of a monumental 2021 in Australian real estate, with national median property price growth looking like it'll be well above +20 per cent for the year.
After such an historic boom, what can we expect from 2022? BuyersBuyers, the leading national network of buyer's agents in Australia, has just released its Property Investor Special Report which takes a close look at the risks and opportunities to come in the new year.
Click through to read the full report which includes key information like the top 10 affordable suburbs in each state as well as plenty of excellent intel for investors and property enthusiasts alike. For now, we'll be speaking with BuyersBuyers co-founder and international buyer's agent Pete Wargent about some of the big things to watch out for in 2022.
Property opportunities in 2022
The BuyersBuyers report highlights NSW, Victoria, Southeast QLD and SA as the key markets that investors can look for solid opportunities in the coming year as further price growth is expected.
Speaking on SA, Mr Wargent notes that the state "hasn't really had a spectacular period any time in the past 10 or 15 years, but it is getting extremely tight in terms of its rental market."
He compares Adelaide to Hobart, which has seen a surge in interest over the past few years, and says there's a possibility that the same could happen for the SA capital.
Looking to NSW, he highlights the Central Coast and Blue Mountains as key regional areas to look at for further growth as well as Cessnock and Berrisfield around Newcastle.
The report explains that rental markets in suburban and regional Australia remain very tight "as renters flee density to seek extra space."
With house prices being driven so high in 2021, another thing Mr Wargent points to is the possibility of units gaining more traction as priced-out buyers shift their goalposts.
He notes that "the markets that generally do well are those where there's not really much new supply that ever gets built," while inner-city locations with a high rate of new development tend to be a lot riskier.
Property risks in 2022
With this year's boom easing off, there are a number of potential stumbling blocks for investors, and Mr Wargent says Tasmania and Canberra could present some of those risks.
Both markets have soared in 2021, but he suggests that "when you're investing in a market that's already gone through that kind of a boom, with the best will in the world—you've missed the bulk of the cycle and eventually, it'll go into reverse."
He warns that "even though those markets have had extremely bullish results recently, I think realistically that level of price growth isn't sustainable."
Some regional areas like Victoria's Mornington Peninsula and the Sunshine Coast in QLD have seen similar "spectacular" price spikes, "so they're probably somewhere near the peak of the cycle," he adds.
Perth, which has been severely isolated from the other states due to border closures and has seen a "huge boom in housing construction," also approached with caution.
On the macro level, APRA's recently announced restrictions to lending could just be their first move.
"We think that APRA next year will see that the market is too ebullient for their liking and they'll probably make some more changes to lending standards," Mr Wargent says.
If they were to restrict higher debt to income borrowing and loan-to-value (LVR) borrowing, "It could reduce borrowing capacity by 10 or 20 per cent," a move that would significantly cool the market.
Other considerations for 2022
Ultimately, Mr Wargent says that "we think price growth will be slower next year than this year for sure, especially if APRA intervenes."
He also expects that the severe shortage of stock on the market and high buyer demand will even out in the coming months, further cooling conditions.
"Demand can outstrip supply for a period, but eventually always comes back in," he says. Buyers get a bit wary about overpaying as prices go up and more vendors come into the market looking to lock in their gains, so eventually, it will balance out."
There are plenty more insights to dig into in the BuyersBuyers report. For a full rundown of the current state and future expectations of the Australian property market, click through to read the report.
