This year, due to changes in interest rates, household savings, rates in employment, government, and bank lending, the booming housing market is likely to see a slight dip. Image – Canva.
  • Interest rates, Australian household savings, employment rate, government intervention, and bank lending
  • All these factors have come together to produce good results for homeowners, according to Peter Maloney
  • However, shifts are expected over the next 12 months

The current booming housing market is likely to see a slight dip in the next year, according to real estate experts.

Dye & Durham, a global legal technology firm, Australia’s managing director Peter Maloney said this year’s real estate landscape could be broken into three distinct phases with a few factors potentially impacting prices.

Dye & Durham Australia’s managing director Peter Maloney. Image – Dye & Durham.

“Right now, all of these factors have come together to produce good results for homeowners, with record-breaking price rises, but we are likely to see some shifts over the next 12 months.”

Interest rates

Mr Maloney said, “while interest rates are at historic lows now, what we need to look for in 2022/23 is higher interest rates.”

With some banks increasing interest rates as much as three times in six weeks at the end of 2021, any further tightening of monetary policy or capital adequacy ratios will see banks needing to respond by increasing interest rates further, said Mr Maloney.

Australian household savings

According to the Australian Bureau of Statistics (ABS), quarterly household deposits increased $33.4 billion partly reflecting the increase in household saving during the June 2021 quarter.

A key driver of the increase in household saving was the reduction in consumption plus the COVID-19 government income support packages such as JobKeeper, Coronavirus supplement, economic support payments, and early access to superannuation.

Mr Maloney said, “However, now we are out of lockdown, savings have dipped again, which means there may be smaller deposits available and more competition for first homebuyer from investor buyers.”

Employment rate

Mr Maloney said, “Australia has a very high employment rate, and now after a long period of flat wages, there’s wage inflation.

“So wages going up is a positive sign for the property industry as it brings lower household debt to income ratios which lead to lending certainty for banks.”

Government intervention

Mr Maloney said people underestimate the role government plays in the performance of the property market.

“In the upcoming election, property is expected to be a hot topic. With high prices, low supply and high volume of investors buying, the conversation will inevitably turn to housing affordability.

Bank lending

Mr Maloney said, currently the barriers for investor lending are being loosened.

“While there’s more risk on investor loans, investor numbers are now overtaking home buyers again in the property market.

“This is a shift away from the trends that occurred during COVID-19.”

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