Pump Melbourne’s real estate market to cool down to 2022

The buzzing real estate market of 2021 is expected to ease in 2022 as Victoria’s housing market conditions return to favor with buyers. Here’s what the experts are waiting for.

The buzzing real estate market of 2021 is expected to ease in 2022 as Victoria’s housing market conditions return to favor with buyers.

Real estate experts – including researchers, economists, a buyer’s lawyer and the chairman of the state’s leading real estate agency – say Melbourne’s Covid-ravaged inner-city units sector is also set to see a turnaround in 2022.

But they expect the upcoming federal election, further intervention by the banking regulator, and highly speculated interest rate hikes could stifle market momentum.

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The forecast comes after Melbourne home and unit values ​​fell for the first time in 14 months in December, slipping 0.1% to a median of $ 795,108, according to property data firm CoreLogic.

Typical housing in the city still stacked 15.1% in 2021.

Big banks have predicted more moderate price increases for Melbourne homes in 2022, ranging from 5% to 8%.

Cameron Kusher of REA Group announced a 4-7% increase and Propertyology’s Simon Pressley a 5% gain – his most conservative forecast for the capital.

Real estate researcher and SQM founder Louis Christopher expected prices to fall between 3% and 2% by the end of the year.

Mr Christopher predicted that the Australian Prudential Regulation Authority would do more to cool the property market in 2022, after increasing the availability buffer for new bank clients last year.

“(Melbourne and Sydney) are most susceptible to even minor intervention by the banking regulator,” Christopher said.

Mr Pressley said that ‘the cracks in Melbourne’s real estate fundamentals’ – including the shutdown of thousands of businesses due to the Covid lockdown, falling job openings, the exodus of tens of thousands residents and rising state government debt – could peak in the second half of 2022.

“Like water, oil and flour, it’s not a good mix,” he said.

Real Estate Institute of Victoria president Adam Docking said the federal election and any hike in interest rates could trigger caution among market participants – but the first would be temporary, and he didn’t expect to that the second occurs before “in the depths of the year” or 2023.

He predicted that reopening the state would bring “more job opportunities” and the return of migrants and students from overseas. The latter would help revive demand from buyers and tenants in the troubled downtown apartment market.

“We are seeing the prices stabilize,… but there is no indication of a reduction in prices,” he said. “Sellers will have to be more realistic with their prices because buyers will have more choice. “

Advantage Property Consultant Director Frank Valentic confirmed: “Sellers will continue to drink a lot of champagne. But there will be more balance than what we had in the seller’s market last year, with fewer buyers being knocked out of the park.

“Buyers will have more opportunities.”

The buyer’s lawyer expected well-located family homes and “units with land content”, such as townhouses and villas, to be the most in demand, with annual price gains of 5 to 10%.

Eliza Owen, head of research at CoreLogic, predicted that the “slowdown phase of the cycle” would begin as 2022 progressed – but she said it “didn’t have to be a disaster” for those who bought at the peak of the market if they viewed their purchase as a long-term investment.

“Lower house prices will lower the barrier to entry for potential first-time buyers, but… mortgage payments could be higher at this point,” she said.

Mr Kusher said the slowdown in price gains should help those trying to buy their first home. But saving a deposit would remain a significant obstacle in a context of weak wage growth.

“We don’t expect interest rates to rise this year, but it will still weigh on the minds of buyers,” he added.

Chief Economist Ray White, Nerida Conisbee, said 2021 ended with an increase in listings, a reduction in the average number of bidders per auction and an increase in time spent in the homes market.

“Conditions are changing more on the buyer’s side,” she said.

“We’re also starting to see funding restrictions, which APRA may increase this year, primarily because investor loans are growing quite rapidly.”

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samantha.landy@news.com.au

Originally published as Pumping Melbourne, the property market will cool down until 2022

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