Australia Property Market Forecast



Have you decided to invest in an Australian property as an expat living abroad? There are a couple of important factors to be aware of that can determine the success of your investment.

The first important factor is keeping an eye on expat mortgage rates. Expat mortgage interest rates can change from year to year and being aware of such changes is important. The second is that following the Australian property market forecasts and knowing that the property market also changes from year to year is essential.

If you’re looking for the vital facts related to the property market in Australia and want to know how it has changed from 2021 to 2022, and how it will look in 2023 and beyond, read this article on the 2022 Australia property market forecast.

Australia Property Market Forecast

Do the major banks predict that there will be continued house price growth for properties in 2022?

Towards the end of 2021, the big four banks made their property price predictions, taking the market into consideration and how it has been affected by the pandemic. Their forecasts for property, looking ahead to 2022 and 2023, include the following statistics:

All in all, as you can see, property price growth is expected to increase in 2022 at a slower rate, and then reduce in 2023.

How have Australian house prices changed over the previous year?

Australian property prices grew 22% thanks to record low interest rates in the year 2021. The Hobart area, for example, had significant increases in capital city prices, with its dwelling value being equal to 28.1%, while the Perth location noticed a modest rise of 13.1%. 2021 also saw surges in property listings in Melbourne and Sydney.

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Which factors have led to the property price rises in 2021?

There are a few main factors that have led to the property price rises in 2021 in Australia, which include:

  • Historically low interest rates
  • Increased borrowing in households
  • Negative gearing
  • Capital gains discounts

Which factors and affordability constraints will affect homebuyers in 2022?

It’s also crucial to acknowledge that there are a few factors that will affect property prices and lead to impacts on buyer demand. For instance, there are a couple of affordability constraints that will affect expat homebuyers and investors.

The historically low fixed mortgage interest rates you might have noticed as an expat investor might have led to a boom in the Australian housing market, but may transition to increasing rates that make housing affordability difficult. It’s also likely that variable mortgage rates may increase towards the end of 2022, as suggested by the National Australia bank.

What’s also expected is that expats may face reduced borrowing power, depending on the lender they choose, due to tighter lending standards that the banking financial regulator APRA of Australia has driven.

Australia Property Market Forecast

Will there be rising mortgage rates in Australia in 2022?

We can say that mortgage interest rates, although having declined slowly over the previous 10 years in Australia, are likely to go up. 

The initial increases in mortgage rates were expected to occur at the beginning of 2021.

When do the big Australian banks estimate rises in interest rates for mortgages?

As an expat investor, you might have noticed that each of the big four Australian banks have their own estimations of when the rates will significantly. Here are the predictions from the main banks:

  • Australia and New Zealand Banking Group estimate that the rates of fixed rate home loans will increase in September 2022
  • Commonwealth Bank estimates that increases will occur in June 2022
  • National Australia Bank and Westpac estimates that increases will happen in August 2022

Mortgage rates and downward pressure on property prices

With mortgage rates set to rise, this puts significant downward pressure on property prices. But what also contributes to downward pressure on property prices in addition to rate hikes, are interest rate serviceability fees. 

Each of these factors lead to a reduction in borrowing power for expats, so it’s important that you search for the right lender. But for now, the interest rates are very low.

Australia Property Market Forecast

Which market ends and locations are currently not performing well for property?

Some of the essential market ends and locations that are currently not performing well include outer suburban locations. 

As an expat investor, you can therefore expect a split in the property market, in terms of the outer suburban locations and the inner suburbs, with affordability becoming a factor that prevents expat investors and residents from paying higher expected property prices.

Does timing the market determine investment success?

One of the most important factors that you may think determines investment success for expat property investors is whether you should time the market, and the short answer is that it’s slightly important but can also prevent you from benefitting from a top investment opportunity.

If you have been wondering whether timing the market is important there are a couple of things to keep in mind.

  1. It can be difficult to time investment strategies. 
  2. Short-term market timing can be ideal, and can lead you to the perfect opportunity. 
  3. But long-term timing might not be the best strategy. It’s possible that you may miss a chance to invest in a good property investment if you are timing the market and waiting for the golden opportunity, as when you finally choose to invest, the opportunity may be gone.

Is timing the market essential for you as an expat investor? It’s a factor that might become less vital for expat investors as time goes on, and the more time you spend in the market with a property investment, the better your investment success is likely to be.

Other factors that determine investment success

Other important factors for investment success are your financial circumstances, the property’s value and valuation, the location of the property in relation to the rental market. Here’s a little more information on each of these points.

1.   Your financial circumstances and goals are crucial for real estate investing success, so assess your finances and the expat home loan interest rates and think about your personal financial objectives. 

Considering how your borrowing power matches up to the property market forecast is important and you can do this by getting the advice of an exceptional mortgage broker.

2.   The property’s value is important. There are two options for getting a clear perspective of the value of property. One is to keep track of the property market forecasts in Australia. The other, more precise option, is to get a property valuation if you’re further along the decision process.

3.   Considering the location and value of the property in relation to the rental market is important as it can determine your investment success. In certain areas of Australia, for instance, tenants may consider renting your investment property as they seek to upgrade their living accommodation (continue reading for more information on this).

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Median house price: how it has changed in Australia

Across Australia the median house price has reached an incredible $1.066 million. To be specific, these are some of the median house prices in Australia:

  • The median price in Sydney is $1,601,467 
  • The median in Melbourne is $1,101,612
  • Hobart has increased to $752,110
  • In Canberra, the median price has increased to $1,178,364 – that is, it has increased 11.3%.
Australia Property Market Forecast

How is economic growth changing in Australia?

Over the course of late 2021, economic growth slowed down, particularly during the September quarter. Despite this slowdown, the economic results were not as bad as anticipated because of a few main factors:

1.   One reason the economy remains in good shape is because it’s propped up by the real estate market, and Australian regulators rely on it (at least for the time being). 

The Australian regulators’ reliance on real estate is reflected in the fact that some interest rate cuts have been carried out by banks such as the Reserve Bank, leading to increases in business and consumer confidence. 

2.   You might have noticed that there have been record low mortgage rates that have contributed to significant interest in the property market from expat investors and homebuyers, and the banks’ interest rates are directly linked to the cash rate. 

The question is whether the cash rate will go up, and many financial experts expect it to rise in 2024.

The Reserve Bank is not expected to increase the cash rate for now – at least not until inflation gets to 2 or 3%.

3.   Despite an increase in 2021, unemployment rates in Australia are falling. New advertisements for jobs have increased over 10% towards the end of 2021, and the unemployment rate is expected to continuously fall, matching its falling rate prior to the lockdown.

4.   Since lenders like the Reserve Bank are offering support to businesses, the economy is reaping the rewards. Businesses remain operational thanks to this support and employees are retaining their jobs.

Property price forecasts for Australia

In terms of the property predictions for 2022 and beyond, we have broken them down into the key locations in Australia. Take a look at the sections found below to get the property price forecasts for locations around Australia.

Adelaide property price forecast

The growth rate in Adelaide increased 2.6% in December 2021 meaning that it has now reached 23.2%, and there is a heightened demand for housing in the Adelaide area.

If you’re following the property price forecasts for Adelaide, you will have noticed that the housing demand has soared, and that home sales have reached the highest they have been since 2002.

As demand increases in Adelaide, supply goes down. The supply has reached a record low in the area.

You’ll notice a significant difference across different locations in Adelaide in terms of the growth rate. In Adelaide city there has been a 4.4% rise in growth rates, whereas in Burnside the growth rate has been 34.2%.

Perth property price forecast

Following a period of growth, the housing market in Perth has become stable. Prices have increased 0.6% during the November period of 2021. They are also 0.4% higher – an increase that has happened over the quarter.

Growth conditions have slowed down sharply because of the closing of state borders and an increase in the stock levels that have been advertised.

If you’re an investor who’s hoping to sell a home in Perth, be aware that the length of time that selling a property takes (in days) has increased slightly. In April 2021 it took roughly two weeks to sell a home in Perth; in November this increased to 21 days.

With rental markets increasing 14.5%, investing in a Perth property is a good option, but keep in mind that if you’re an Aussie expat looking to return to Australia and are looking for a job to finance your investment, there may be other better property investment locations in Australia that offer better job opportunities.

Canberra property price forecast

The median house price in Canberra has jumped significantly when compared with all capital cities in Australia in 2022. It jumped 25.5% and has reached a median of $1.015 million.

What does this mean for prices? It shows that they increased significantly, giving a rise of $96,000. This price increase is the highest in nearly 30 years, and prices in particular regional areas of Canberra have reached above seven figures – including the inner north and inner south.

Australia Property Market Forecast

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Brisbane property price forecast

Brisbane has seen all of its subregions’ property values increase by 20% between 2021 and 2022. Its dwelling values have risen by $127,000 between 2021 and 2022.

With overseas migrants favouring Brisbane and international students returning to the area, the city has been propped up by population growth. This population growth has balanced the huge number of new properties and dwellings in Australia. 

Interstate migration is supporting local demand and affordable prices for housing, but housing supply is lacking.

Nonetheless, in South East Queensland, the highest amounts of growth in the property market have been recorded. Here, values of housing have surged 32%.

It’s expected that Brisbane’s housing market trend will be positive and that investors (both expat and local) continue to be interested in investment opportunities in the Brisbane location.

Melbourne property price forecast

Despite the slowdown in the Melbourne property market during the final months of 2021, house prices in Melbourne are reaching a record high. They had increased a mere 0.8% in the last three months of 2021, but they have now nearly increased 15%.

When compared with other regions it’s clear that the performance is slightly modest. The main cause for this is weaker market conditions for units and the closing of international borders.

It’s expected that the property values in Melbourne will increase in 2022, with investment properties showing promise that they will exceed expectations with their performance.

Sydney property price forecast

The Sydney location has noted a significant rise in the value of homes. The house values have increased just over a quarter – 25.5%, a change that has happened over the past year. The prices of units have increased as well, but a modest 7.6%.

Investors in Australia have begun to recognise that there are certain risks with purchasing high-rise apartments located in the Sydney area, with the main issue being a lack of capital growth. However, expat investors continue to invest in such property.

It is expected that the bigger regions in Sydney, such as New South Wales, will perform well in 2022. And another expectation for the Sydney location is that more investors will decide to purchase properties outside the Sydney location, such as in Western Sydney.

Australia Property Market Forecast

Which trends are expected for property markets in 2022?

There are a few key trends for the Australian property markets in 2022. Here are five trends to watch out for.

1. The homebuyers’ housing demand will remain high

Despite increases in home prices, there is an overwhelming interest in the property market and homebuyers’ housing demand will most likely stay high. It’s clear that investors and many buyers do not want to miss out on homeownership or investment opportunities.

Combine this with the fact that borrowing prices are at their lowest for expat home loans and you can begin to see how the housing demand will stay high in 2022.

2. Investors will continue to snap up opportunities

The fact that expat and local investors will continue to seize housing opportunities means that the demand from first-time home buyers in Australia will start to reduce. 

Although there are plenty of home buyer incentives available to first-time home buyers, it’s clear that plenty of expat property investors are keen to take advantage of the low interest rates while they are low.

Now, despite low investor lending in the past couple of years, there are now low interest rates that mean expat investors like you are likely to explore their prospects in terms of investment property investment.

3. Prices of property will increase throughout 2022

It’s expected that property prices will continue to strongly rise throughout 2022, which is affected by positive economic growth, a good ratio between demand and supply, and increased consumer confidence. What’s more, you’ll notice that low interest rates will also contribute to increased property prices.

Keep in mind that particular market segments will not do so well in 2022, including apartment towers in the cities and certain accommodation near universities. The latter is expected to improve when students return from abroad to Australia.

4. Homebuyers will pay high amounts to live in the ideal neighbourhood

Amenities are still critical for home buyers and expat investors looking to make a good return on their investment. 

It’s expected expat investors and home buyers will pay high amounts to invest in or purchase property that has amenities such as educational institutions, shopping amenities and services from a range of businesses. The ideal neighbourhood that is located in the right place is important post lockdown.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

5. Homebuyers will look to upgrade their quality of living through property

There are a few critical trends that demonstrate that home buyers will seek to upgrade their quality of living through the property they choose. A few of the main, most important ones are listed just below:

  • One third of homeowners want to sell their property and upgrade their homes within five years as they seek to own a larger home in favourable neighbourhoods.
  • There are many Baby Boomers seeking to move into a larger apartment that are in close proximity to the neighbourhoods of friends and family.
  • Tenants may be looking to upgrade their living space and are seeking to avoid apartments that are on the small side. For this reason, expat investors like you who have purchased property at a higher price may notice a surge in the interest of tenants looking to upgrade.
  • At the same time, some tenants who may have built their deposit for a first home may decide to seek their own property and switch from renting to being a homeowner.
Australia Property Market Forecast

Invest in property, track the Australia property market forecast and follow Odin Mortgage

Investing in property as an expat is a shrewd move. Not only can you get the benefits of a capital gain if your property increases in value, but you can rely on an investment opportunity that consistently delivers good results when compared with the volatility of the stocks and shares and other investment choices. 

To get the ball rolling, all that you’ll need is the right deposit, the support of an expat mortgage broker, and an expat mortgage to begin your investment.

Odin Mortgage is the leading broker for expat mortgages. We have all the facts you’ll need for monitoring the property market in Australia and are prepared to assist you on your property investment journey. Explore our services, including our mortgage calculator, stamp duty calculator, and our investment property calculator.

Australia Property Market Forecast FAQs

Will house prices drop in Australia in 2022?

Although they have continued rising through the beginning of 2022, it is expected that property prices will start to slow down in 2022 and eventually drop by between 3% and 3.5% in 2023. They will reach their peak in mid-2022 and are likely to decrease by 10% in 2023.

What are the long-term predictions for property markets prospects?

Since it’s expected that the number of people who live in each Australian household will reduce, the prospects for the Australian property market include that more real estate will be required to house them.

In fact, with the population set to increase by more than 50% it’s likely that we will see an increase in apartment towers to cope with the increase.

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