- Sydney property prices soared in 2021
- Prices set to moderate next year
- Market to swing in favour of buyers
As we wind down to the end of a property market year none of us will probably ever experience again, many commentators are making predictions about what may happen next.
Of course, we all need to remember some of the alarmist forecasts that were bandied about when the pandemic started – which never came to pass.
However, the situation now is very different to what it was back then, with more economic certainty about what lies ahead.
One of the most accurate property forecasts has historically been from SQM Research with its current prediction being a -2% to 4% for dwelling price change in Sydney next year.
This forecast presumes that the cash rate stays the same next year, quantitative easing measures are wound back, headline inflation is between 3% and 6%, plus some sort of APRA intervention occurs at the tail end of the year.
It’s vital to remember that these potential results are quite normal when a market has just experienced a boom period – and don’t forget that the Sydney dwelling price has risen by an extraordinary 25% over the past year alone.
This means that property owners in the Harbour City are generally sitting on hundreds of thousands of dollars of extra equity that they simply did not have in 2020.
The key to success to not let this capital growth just sit idly by when it could be recycled into another property – either as an investor or an upgrader.
My view is also that the Sydney market will have moderate to no growth in 2022.
During the back end of 2021, in my target market of The Hills District, we have seen an increase in stock and a decrease in demand.
I also sense that there is a lot of buyer fatigue in the market and vendors expectations on price are also being challenged, which is resulting in softer market conditions more generally.
Next year will see also demand taper off amidst the macro-topics of increasing interest rates and rising household spending due to inflationary pressures.
Of course, the big unknown is when will the overseas migrant tap be turned on, and what will happen with interest rates next year.
I feel these two factors are going to have a big impact on the direction of the market in 2022. However, it is still too early to tell which way either of these important fundamentals will go at this stage.
More buyer choice
Throughout this year, property buyers and buyers’ agents, too, have struggled with a lack of supply, plus some rather insane sale prices that don’t stand up to scrutiny if you as ask me.
We regularly removed ourselves from being in the running for properties – when the vendor just wanted too much money – to protect our clients from overpaying.
There were plenty of overly exuberant property buyers out there, who may learn a hard lesson next year when prices start to moderate and even soften.
Sydney – Stock for Sale
However, there is more stock coming onto the Sydney market, which is a situation set to continue next year. More stock means more choice and potentially lower buy-in prices for upgraders in particular.
It’s becoming clearer that the peak of the Sydney market boom has passed, which means that it is an ideal time for home buyers to make their move early next year – as prices soften and supply rises.