Property Predictions for the Remainder of 2021 and Beyond
As we approach Christmas, many Australians are wondering what is in store for the housing market as we go forward to 2022.
Melbourne has survived another chaotic year, with a series of lockdowns impacting on nearly every area of daily life. While we eagerly await the opening of state and international borders as vaccine targets are met, the local property market remains strong.
Despite the challenges and restrictions faced by Melbournians over the past 9 months, the housing market continues to be remarkably buoyant and selling prices are still very high. Buyers and vendors have embraced new selling techniques, including digital property viewing and smaller numbers at auctions.
The 12 months to date have seen remarkable growth in property demand and prices in every city across the country, with Melbourne’s overall increase of house prices by 15%.
For the past 12 months, supply has been far outweighed by demand, a factor which has continued to drive prices skywards. However, there are signs that the market growth may be slowing a little.
We are starting to see a large increase in advertised listings, a factor that is bound to impact the supply-and-demand chain going forward. In fact, Corelogic reports that the last 4-week rolling average has seen a national increase in listings of 28% since it’s low in September 2021.
So, where will the market go from here?
While none of us are crystal gazers, a good look at the data and the historic trends gives us more than a few clues about what’s around the corner.
There’s no denying that the data suggests that the momentum may be slowing slightly but keep that in context – according to Corelogic, the national market pace has been tracking its fastest pace since the year ending 1989!
The surging property market reached its peak of 2.3% increase in dwelling prices in March 2021, and since then it has eased to a more moderate increase of 1.5% nationally. There are several factors which have contributed so far to the slight slowing of the market nationally:
Affordability
As housing prices have gone up, affordability of buying a home has become increasingly challenging for many Australians. The widening gap between the average wage and the median house price is being felt across most sectors of the property market.
And as raising a deposit and coming up with the cash to fund transactional costs becomes increasingly difficult, the dream getting a foot in the door of the property market is gradually fading for some.
Rising Long-term Interest Rates
Even though the RBA has repeatedly stated that official interest rates will remain ‘on hold’ until at least 2024, some lenders are starting to increase their long-term borrowing rates.
This may be a cause for hesitancy with buyers because they either have to accept a higher long-term rate or sign up for a shorter, low-interest rate loan and run the risk of being hit with much higher rates when the term expires.
Increase in Availability
As spring listing season ramps up, Melbourne’s advertised inventory is up 18.3% above the 5-year average and total listings are now sitting at 2.9% above average.
This increase in supply may result in some of the heat being taken out of the market as we enter 2022 – in short, buyers have more options to choose from and competition for properties may be less urgent.
Reduction in Government Stimulus
With the expiry of the federal HomeBuilder stimulus package in April of this year, the demand for construction of new homes may take a dip.
What does this mean going forward for the market in Melbourne?
The property market in Melbourne continues to be resilient and strong, just like our unbreakable community spirit! As we come to the final months of 2021, high demand alongside low advertised supply means that the atmosphere remains positive for sellers.
Housing in the suburbs is still very popular with buyers – larger properties that offer more options for families and work-from-home arrangements are on buyers’ bucket lists. And even with worsening affordability, house prices across Melbourne continue to rise at a higher rate than units, a trend which has been noticeable right through the pandemic.
The team at Love & Co are always here to support and serve the community in Melbourne’s Northern suburbs. As the housing market continues to thrive, we’re helping folks achieve their dream of homeownership.
For more information about the future of Melbourne’s property market, be sure to get in touch with your local Love & Co team – contact us here.
The information in this article is for information purposes only and should not be taken as financial, legal or personal advice.
While care has been taken to ensure that information contained in this article is true and correct at the time of publishing, any changes after the time of publication may impact on the accuracy of this information.
External website links are not only for references and are not affiliate links.