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- Real estate values to rise 10% in 2022
Real estate consumers should ignore predictions by some property experts and stick with bricks and mortar, with values expected to rise by 10% next year.
Over the past few weeks, several analysts have decided in their wisdom to talk down the prospects of Australian real estate, not in 2022 but in 2023. According to leading real estate commentator Raine & Horne Executive Chairman Angus Raine these so-called experts might have jumped the gun with their longer-range predictions.
“A week is a long-time during a pandemic, let alone forecasting what markets will do in 2023,” said Angus Raine. “With the latest strain of COVID-19, Omicron grabbing attention, it’s very courageous to predict the returns from real estate two years into the future.
“During a pandemic, it’s probably better to concentrate on what we do know, which is that Australian housing values haven’t risen this fast since the late 1980s. With buyer demand across the country holding strong, I honestly can see no reason why real estate values won’t enjoy decent growth of 10% in 2022.
Savings and massive pent up buyer demand
The positive outlook is also based on the decision by Australians to stockpile a collective $200 billion in savings during the pandemic. “Once we return to normal, plenty of this extra wealth will funnel its way into real estate,” Angus Raine said.
Better still, the ABS reports that 26% of Australians expect their household income to increase, with 11% expected to build or buy a new home[i], which is a massive pool of property buyers waiting to pounce.
COVID has also created renewed demand for regional and coastal real estate which many attending open homes will attest has not cooled. Angus Raine said, “In 2022 this regional and coastal shift will continue, with more Australians not simply moving suburbs, but they’ll move to new regions.”
Managing COVID
The rise of Omicron must be monitored. Pleasingly Federal Health Minister Greg Hunt told reporters in late November that: “We have no signs that this is a more dangerous disease in terms of its impact on hospitalisation... or loss of life,” he said. Minister Hunt also said the strain had also not been proven to be especially resistant to COVID-19 vaccines.
At the same time, the management of COVID-19 is ongoing[ii]. Australia is at 92.3% for first doses, 86.7% for second doses, and importantly, South Australia has joined the club of states and territories that are now 80% double dosed.
Real estate haven
In October, CoreLogic announced its estimate of the total value of residential real estate in Australia surpassed a new record of $9.1 trillion. The surge in value follows the recent broad-based capital gains witnessed across the country, with most housing markets now beyond their peak. CoreLogic Head of Research, Eliza Owen, said “This puts housing values around 28.2% higher than the estimated value of superannuation, the ASX and commercial real estate combined.
“Australian real estate has proven the asset of choice for Australians over the past two years and this is an association that will continue in 2022, 2023 and beyond,” said Angus Raine.
He continued, “At the end of the day there could be more properties in 2022, but most real estate markets will still have excellent capacity. There’s also an old saying in real estate that you only need one buyer to sell a property, but most markets still have plenty of buyer depth and this will underpin decent price growth in 2022.”
[i] https://www.abs.gov.au/statistics/people/people-and-communities/household-impacts-covid-19-survey/latest-release#income-and-savings
[ii] https://www.health.gov.au/ministers/the-hon-greg-hunt-mp/media/minister-hunts-press-conference-on-28-november-2021-about-acute-myeloid-leukaemia-treatment-venetoclax-and-the-covid-19-omicron-variant#:~:text=At%20the%20same,keep%20coming%20forward.