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Property price predictions for 2022, according to Australian economists

December 14, 2021
by
Craig Gibson

With this year drawing to a close, it's time to take a look at 2022 property market predictions from leading experts and analysts. 

We’ll cover each state and territory, with a focus on our capital cities. The house price predictions featured here are based on real estate market projections by four big players in this area: Westpac, QBE, ANZ, and independent property analyst Louis Christopher of SQM Research.

Before we look at each state and city in detail, it’s worth taking a moment to look back at what defined 2021. 

A look back at 2021 and a peek at 2022

Family in their backyard about to play a game of soccer
The 2022 property market will present homeowners, prospective buyers, and investors with a variety of opportunities and challenges.

The big story of 2021 has been the runaway house price growth recorded, with around 20+ per cent gains overall—despite extended lockdowns and restrictions in our two most populous markets, Victoria and NSW. This has been the strongest price growth since the late 1980s housing boom, driven by a number of factors, including significant government fiscal and monetary support. 

But many unknowns remain as we move into a new year, including the impact of affordability, talk of a hike in interest rates, and levels of immigration in 2022. 

Most analysts expect house prices to slow in 2022 and fall in 2023, albeit with slightly different projections. ANZ’s forecasts, based on Senior Economist’s Felicity Emmett and Adelaide Timbrell analysis, project prices to peak in late December 2021 and weaken in the new year due to a trio of factors, namely tighter credit/rising fixed mortgage rates, increased stock on the market, and decreased affordability. As we’ll see, the other experts have slight variations on this theme.

Needless to say the year ahead will present homeowners, prospective buyers, and investors with an array of opportunities and challenges. 

New South Wales property forecast 2022

View of Sydney city with Sydney Harbour Bridge in the background
According to SQM Research, the Sydney property market is projected to peak sometime in June or September quarters.

Across all forecasts we’ve looked at it’s clear that property prices in New South Wales are set to rise in the year ahead, albeit at a slower rate.

In terms of Sydney property market forecasts, property analyst Louis Christopher of SQM Research is the most pessimistic of the four. He believes, “there will be a Sydney housing market peak next year sometime either in the June or September quarters,” driven by “APRA intervention in the first half of 2022 and amplified by the RBA lifting rates sometime in the second half of the year.” His projection is for growth to be throttled to +2% - +4% over the next year.

QBE’s Australian Housing Outlook (2021–2024) predicts overall prices in Sydney to advance 8% in 2022.

ANZ forecasts, “prices to rise more slowly in 2022,” with Sydney property prices projected to advance +6 per cent next year. This is after property prices shot up +25.2 per cent in the year up to November 2021, so this would be a significant slowdown. 

QBE’s Australian Housing Outlook (2021–2024) predicts overall prices in Sydney to advance 8% in 2022 with, “pedestrian growth in 2022/23 and 2023/24,” though they expect units to rebound due to “declining numbers of completions, demand is anticipated to push the median unit price up from June 2021 by 19% to $997,000 as at June 2024.”

Westpac is in the same ballpark as the other institutions when it comes to making a projection for Sydney property prices, forecasting single digit growth of +6 per cent in 2022. 

Regional NSW forecast

In terms of regional NSW, SQM Research’s forecast for 2022 is for, “a correction in prices and rents…as a number of city dwellers move back to the large capital cities,” though with a “longer term gains for those townships located on Australia’s coast,” where the Covid-induced sea change has had a significant impact on certain regional locations. 

Here’s what experts predict will happen to dwelling prices in Sydney in 2022: 

Westpac QBE SQM ANZ
+6% +9% +2% - +4% +6%

Victoria property forecast 2022

Aerial view of Mornington Peninsula in Melbourne on a bright day
Some analysts' predictions for the Melbourne property market in 2022 are quite subdued.

Victoria, and Melbourne in particular, had a rather torrid time over 2020–2021, enduring some of the longest lockdown’s experienced nationally and globally. This dampened property sector activity initially, but it subsequently posted a significant recovery, though this was unevenly spread across metropolitan Melbourne. 

ANZ projects Melbourne property market predictions to be rather more subdued in 2022, forecasting gains of +7 per cent, compared to the +18 per cent rise this year. Westpac is in similar territory, predicting a gain of +8 per cent due to record valuations which are, “10% above their previous price peaks in 2017–18, a time when it encountered major affordability problems.”

The relatively modest pace of price rises over the last 12 years means affordability is still favourable.

QBE is slightly more optimistic, taking a different perspective on affordability. The reporters forecast gains of +11 per cent, based on, “the relatively modest pace of price rises over the last 12 years means affordability is still favourable.”

Christopher thinks, “the Melbourne market is susceptible to a price correction on any further intervention by APRA,” so is forecasting -3 percent to +2 per cent for this market. He is also cautious on the Melbourne CBD unit market due to, “too much stock there for sale right now… with more on the market next year due to yet another 65,000 dwellings due for completion.”

Regional Victoria forecast

QBE forecasts regional Victoria (including Geelong, Ballarat, and Bendigo) to, “slightly underperform Melbourne in the coming three years,” mainly due to “the end of the HomeBuilder scheme, and the reduction in the $20,000 Regional First Home Buyer grant.”

Here’s what experts predict will happen to dwelling prices in Melbourne in 2022: 

Westpac QBE SQM ANZ
+8% +11% -3% - +2% +7%

Queensland property forecast 2022

Panorama of houses on Emerald Lakes
QBE believes the pace of growth in the Brisbane market will moderate through 2021/22.

Over the pandemic Queensland has remained relatively unscathed by the virus itself. It’s also benefited from interstate migration, as buyers flocked to the sun and more affordable property.

Overall, QBE is bullish on the Brisbane market, forecasting it will grow +11 per cent over 2022. However they predict, “the pace of growth [will] moderate through 2021/22 as the incremental impacts of these stimuli fade.”

The key to this market’s medium term fortunes are the, “relatively affordability of housing, when compared to Sydney and Melbourne, and the expected sustained net interstate migration inflows will help to prevent a sharp slowdown in momentum in 2022/23.” ANZ is similarly bullish, predicting price rises of +9 per cent. 

Most analysts predict double figure growth for the Queensland property market in 2022.

SQM Research is also positive on Brisbane and its Olympic city status, forecasting growth of +8% to +14% for 2022. Christopher says we can, “expect outperformance of the Brisbane housing market compared with other Australian cities over the next decade. It will also benefit over the short term from interstate migration inflows.” 

Westpac is also predicting double figure (+10 per cent) growth in 2022, though forecasts a “levelling out over the course of next year before moving into a correction phase in 2023.”

Regional Queensland forecast

The big story for the Gold Coast and Sunshine Coast, are the rise in interstate migration from New South Wales and Victoria. QBE points out this, “has strengthened in the past 12 months, putting the pace of house price growth in these two areas much higher than that of Brisbane.” They project prices on the Sunshine Coast to rise +13 per cent in 2021/22.

Here’s what experts predict will happen to dwelling prices in Brisbane in 2022: 

Westpac QBE SQM ANZ
+10% +11% +8% - +14% +9%

Western Australia property forecast 2022

Aerial view of Perth cityscape
A weakening of iron ore prices could impact Western Australia's property prices in the coming year.

After a protracted slump, QBE is optimistic for the Perth market moving into the new year, based on housing affordability, the uptick of the resources sector, and the imminent resumption of migration. Their forecast is for Perth to record an ongoing recovery, with house price gains of +9 per cent in 2022. 

SQM predicts a range of -3% to +7% contraction or growth.

SQM Research points out that, “Perth housing prices are still below where they stood in 2010, offering the second best value (Adelaide the best) of any Australian capital city when comparing rents to prices or indeed wages to prices.” They predict a range of -3% to +7% contraction or growth, depending on a variety of factors, including a weakening in iron ore prices—something which is currently playing out. This will have a direct impact on property values in WA mining towns if this trend persists. 

ANZ is a little more conservative on Perth, forecasting +3 per cent growth over 2022 and negative growth thereafter. 

Here’s what experts predict will happen to dwelling prices in Perth in 2022: 

Westpac QBE SQM ANZ
+8% +8.7% -3% - +7% +3%

South Australia property forecast 2022

Adelaide cityscape lit up at night
Forecasters' projections vary when it comes to South Australia's property market.

SQM Research is positive on Adelaide property for the near future, forecasting growth of between +4 per cent to +8 per cent. This is partially driven by, “the lowest asking price for all cities, making Adelaide, the most affordable housing of any capital city in Australia,” with a median house price of $622,000. 

ANZ is a little more cautious on Adelaide, projecting it will grow +3 per cent next year, with a contraction in 2023. Westpac, on the other hand, is relatively bullish, predicting a rise of +8 per cent for the SA capital.

House prices are projected to record total growth of 9% over the next three years, according to QBE's projections.

QBE believes South Australia being less exposed to international tourism and immigration means it escaped largely unscathed over the course of the pandemic. The local economy has also benefited from state investment which has driven growth, with a large health, military, and space component helping to sustain this. They project house prices in Adelaide to, “record total growth of 9% over the next three years, bringing the median to $644,000 in 2023/24.”

Here’s what experts predict will happen to dwelling prices in Adelaide in 2022: 

Westpac QBE SQM ANZ
+8% +8% +4% - +8% +3%

Tasmania property forecast 2022

Colouful Hobart houses with a view of the ocean and mountains in the background
Some analysts believe Hobart is dealing with an overheated property market.

Tasmania has also been relatively untouched by Covid, and the local economy has mitigated the drop in mainland and international tourists with a drive to get locals to explore their own island. The state government has also provided considerable financial support to support the local economy. 

QBE expects solid momentum for the Tasmanian property market into early next year, before falling back in March 2022.

SQM Research is a little wary on the Hobart market moving forward, forecasting -3 per cent to +2 per cent for 2022. This is largely because Christopher believes that, “Hobart is now an overheated housing market. Good value has long gone.”

QBE is forecasting, “solid momentum into early next year, before falling back in March 2022,” with “the median house price in Hobart is forecast to reach $845,000 in June 2024, a rise of 24% from June 2021.” 

Like all other capital cities, ANZ believes 2022 growth (+8 per cent) will be down on this year’s stellar performance, and will fall in 2023. Westpac takes the same view, predicting a +6 per cent increase in 2022, followed by a -2 per cent drop in 2023. 

Regional Tasmania tends to lag the Hobart cycle, so you should build this into your expectation for the short/medium term for Launceston and other regional investment locations.

Here’s what experts predict will happen to dwelling prices in Hobart in 2022: 

Westpac QBE SQM ANZ
+8% +8% +4% - +8% +3%

Northern Territory property forecast 2022

Aerial shot of Darwin city
If you're considering investing in property in NT, it may be best to move cautiously.

Darwin and NT property had a productive pandemic, with significant gains for houses (+29 per cent) and units (+33 per cent), but low population growth and housing oversupply are significant risks.

The price and rent swings on property are huge.

SQM Research is extremely cautious on the NT in general (-4 per cent to +1 per cent), with a single word verdict: avoid! He believes the state is, “very much a boom/bust scene. Get your timing right and you will make a killing. The price and rent swings on property are huge.” 

ANZ is similarly cautious on this market, forecasting a modest +3 per cent gain over 2022. 

QBE expects, “much more moderate total house price gain of +14 per cent is expected over the three year period to 2023/24, with a forecast median house price of $696,000.”

Here’s what experts predict will happen to dwelling prices in Darwin in 2022: 

Westpac QBE SQM ANZ
+8% +8% +4% - +8% +3%

2022 property price trend

As you can see the four property analysts we surveyed are unanimous that we are at, or just past the peak, and that price growth is likely to level off over 2022. This is largely based on the following factors:

  • Affordability constraints are already starting to make an impact, particularly with first time buyers who are dropping out of the market. (ANZ indicates that more than 80 per cent of annual income is required for a first-home-buyer deposit).
  • Financial conditions are tightening, with the Australian Prudential Regulation Authority (APRA), the body that regulates the finance sector, raising the serviceability criteria for new loans in mid November.
  • The likelihood that the official interest rate will rise in 2023, which Westpac believes could see prices drop -5 per cent in 2023.

Beyond all this a big unknown still remains: how the pandemic unfolds in 2022 and beyond, something no one can predict or forecast.

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