Despite the lasting effects of the global pandemic which struck real estate markets limiting its growth in an ever-changing climate, 2022 is predicted to see much more growth. Over the past year, Sydney property markets have witnessed approximately 24% growth in comparison to Melbourne’s 15% growth, and Brisbane’s 20% growth.
The effects of Covid-19 have greatly affected low-income earners in particular in comparison to high and middle income workers, meaning that they are less likely to afford the prices of these booming property prices within regional and inner suburbs of Sydney.
The number of homes listed on the market has seen a massive peak, however the demand for these houses has not seen the same pattern. New mortgage commitments have also dropped considerably, indicating a drop in home demand.
Because practically every home in Australia is bought with a mortgage, historically, lowering mortgage growth has meant slower house price increase.
Furthermore, due to falling affordability, property price growth will halt. Home values have increased significantly faster than salaries, putting a growing number of purchasers out of the market. The pool of possible buyers will inevitably diminish as property values rise as a result.
According to SQM, the prices of free-standing houses in Sydney have increased by about 20% in the last year, while equivalent properties in Melbourne have increased by between 12% and 14%.
Sydney homes have seen massive growth particularly in areas which are coastal, with suburban properties achieving in excess of 10 million. These rates of growth of premium prices will indubitably continue as mobility restrictions are eased and state and international borders are opened, and increased investors return to the market with increased confidence in the sustainability of property prices.
This should result in a greater demand for Sydney properties, which would inherently increase the property prices throughout Sydney, from the coastal suburbs to areas which are more inland.
Property Investment Overview 2022
For those thinking of property investment in the Sydney real estate market there are many issues to consider. The gains can be great, but it’s important to make prudent decisions regarding location, type of property, the amount you want to spend and the returns you can expect.
Of course, there are many factors to consider when planning a property investment, including:
Previous capital gains
Any planned changes
Remember property investment is a long term strategy. The idea is to accumulate property in between each property “boom” during your working life without affecting your lifestyle. Property booms will inevitably slow down, but the factors that influence this are simply part of the property cycle.