Buying in 2022: Domain

• “The year is closing in a different position to the start," said Domain's Dr Powell
• Prices are not expected to rise at the same pace as in 2021
• With appraisals soaring, many are looking to sell in 2022

Relief is expected for buyers next year as the house price growth rate continues to cool, according to Domain’s End of Year Wrap for 2021.

Domain chief of research Dr Nicola Powell said, “the year is closing in a different position to the start, sellers are re-engaging with the market, increasing supply which in turn offer greater choices for buyers.

“New listing are coming to market quicker than they are being sold. While it remains a sellers’ market, slowly market dynamics are changing to provide more favourable conditions for buyers.”

 Dr Nicola Powell, Domain chief of research

The report found prices are not expected to rise at the same pace as in 2021 with tighter lending reducing buyers’ leverage and wages growth not keeping pace with last year’s price growth.

With appraisals soaring above last year, a number of homeowners are considering listing their properties for sale in 2022.

These new listings are expected to remain strong which will continue to bring the total homes for sale into a ‘normal realm’, stated the report.

Domain expects Australians will continue to seek out coastal locations, with beach side popularity continuing to boom as house prices in Somers (VIC), Byron Bay (NSW), and Sunshine Beach (QLD) increased by 69%, 58%, and 48% respectively over the past year.

Dr Powell said, “Investors will continue to be a growing market segment, unless APRA puts on the brakes. It remains a landlords’ market across the major cities and into regional Australia. 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.”

Once international borders fully open, regions which historically have a high level of overseas migration and student population will be susceptible to a tightening rental market, according to Domain.

Top 6 most searched areas from overseas

1. Melbourne, VIC
2. Sydney, NSW
3. Mosman, NSW
4. South Yarra, VIC
5. Epping, NSW
6. Brisbane City, QLD

Dr Powell said, “Population growth is likely to be a government focus in 2022 and beyond to sustain higher economic growth and build Australia’s skilled workforce, achieved by bolstering the migration intake.

“Job ads are the highest in 13 years, with severe shortages in certain areas as a result of closed international borders. The return of overseas migrants, international students and particularly skilled highly-paid migrants, will add to demand for housing.”

2021

Domain states 2021 has been the year of change due to COVID-19 impacts.

Australian capital city house prices peaked at $1 million, recording the fastest annual rate of growth on record at 21.9%.

Dr Powell said, “analysing keyword searches helps us distinguish between changing trends or fleeting moments of desirability.

“The pandemic has forced us all to use our homes differently as we spent more time than ever in them and perhaps forever made a mark on our purchasing decisions, property wish lists and architectural trends.”

Keywords that have seen the biggest proportional increase

Source: Domain

Buyer demand in 2021 was higher than the three-year average at the end of November across capital cities except Hobart.

Dr Powell said, “Spring began with a  higher level of buyer demand than it has ended across most capital cities, to varying degrees. The transition from Spring to Summer normally brings a dip in buyer demand with an average drop of 11% across the combined capitals over the past three years.

“However, the start to summer has been unusually strong by historical standards and is likely to bring with that more activity than has been seen over the past 3 summers. However, affordability constraints, further pending moves from APRA and the prospects of interest rate hikes will weigh on buyer demand.”