Sydney Property Investment Update 2022
As loan rates drop significantly and rental vacancies tighten, realty developers are expected to pick up properties and apartments around Sydney in 2022. However, experts predict that everything will not be plain sailing, as prospective owners encounter the uncertainty of housing rules with the new government.
Moreover, even though interest rates might not even increase directly with the rising inflation, stiffer lending standards enacted in 2021 have indeed made it more difficult for buyers to obtain a mortgage. However, this was yet to have a significant influence on the people looking for property investment opportunities.
The Current Scenario
Realty prices in Sydney are expected to rise by double digits in the coming year due to the high demands in the core suburbs. Whereas apartments are facing a low in-demand slope. Apartments that are family-friendly and are located in the inner high-in-demand suburbs are in demand from investors, while tall tower apartments are expected to face a sluggishness.
In Sydney’s elite neighborhoods, the reduction in prices has persisted, with top quartile property prices down 1.5 percent over the last few months as opposed to a 2.5 percent growth in bottom quartile real estate values.
A similar pattern can be identified in the apartment, where prices have dropped 2.2 percent in the top quartile but also are up 0.3 percent in the bottom quartile. It’s typical for the costlier segment to dominate the trend.
The Reserve Bank of Australia (RBA) has also changed its policies in reaction to high inflation. A part of this would be attributable to global macro factors that may be mitigated in the coming times. However, the RBA has to adjust the rates now more swiftly, considering the rigid labour market and inflation in Australia.
Moving Forward In The 2022 Real-Estate Scenario
In the coming times, the real estate market and property investment opportunities will largely depend upon the scope of the tightening that can occur in interest rates.
Slowing Growth In Property Prices
By December 2022, the market is likely to witness a slight fall in property prices as RBA starts an accelerated tightening cycle to combat rising inflation. While cash rates are expected to rise to 2.35 percent by May 2023.
With the significant rise in fixed rates, cash rates going uphill will be passed on to changeable lending rates, significantly increasing minimal level debt payments and lowering the ability to borrow.
Overall, real estate prices will be on the rise even in 2022, but the price growth will be slow rather than the fast annual pace experienced in the last few years.
- A Rising Two-Tier Real-Estate Market
With affordability issues limiting property investment opportunities and price growth in Melbourne and Sydney, some areas are still expected to outperform, making the price appreciation fragmented all over the city. Low-priced properties in the outlying areas will be outmatched by the central city areas.
- Increase in Rents
According to leading investment property consultants, rental costs will keep rising throughout 2022 due to increasing renters amidst low vacancy rates. With the opening of international borders, rental housing is expected to see an upsurge, as international students return, putting more pressure on educational institutions and cities’ central business districts.
Some Upcoming Property Trends
- Real estate will still see a large crowd of people who wish to invest in a property as a property investment. Even when buyers have become selective due to slowed market growth, they still have a thing for A-grade properties that are up for sale.
- Investors will squeeze out people buying property for the first time. The demand from first-time buyers is gradually decreasing due to the rise in property prices by the re-entrance of investors. Amidst lowered interest rates and lesser restrictions on lending, investors are all set to enter the market.
- With people looking at a way to upgrade their lifestyle, this cycle will be led by upgraders. With an ample amount of property investment opportunities and surplus rental properties, several renters and investors would upgrade to a better locality or bigger properties.
- Tenants also wish to take advantage of the numerous incentives for first-time property investors hence shifting their status from renters to owners.
Conclusion
After a year of an upsurge in prices, investors, upgraders and first-time home buyers are expected to keep a close eye on the Sydney real-estate markets in 2022. Despite evidence of a declining trend at the upper end, investment in infrastructure and its development, accessibility concerns, as well as immigration will result in continuous demand in inexpensive and mediocre market segments. The RBA indicated that their economic experts expect the interest rates to rise to 1.75% by end of 2022 and 2.5% by end of 2023. Therefore, even amidst the ample property investment opportunities, the housing prices will be responsive respect to the increase in interest rates. This would result in lowered income growth and usage. If you’re planning to invest in the burgeoning real estate segment, you can seek help from professionals at Quarter Acre to bag the best deals!
