How is the market tracking at this stage of 2022?

April 12, 2022

Easter holidays were a great chance for rest and relaxation yet that came with the realisation that 2022 is swooping away before our eyes.

And make no mistake - the property market never takes a break, even on long weekends and holidays, while federal budget and election announcements and potential cash rate changes can easily affect your property plans.

But never fear: here's a quick rundown of 2022's latest, and greatest, details.

Federal election

We all knew a federal election was on its way this year but no one knew quite when the great date would be until this week, when Prime Minister Scott Morrison announced on Sunday that Australians would head to the polls on Saturday, May 21.

Election years are often notorious for plenty of property caution for both buyers and sellers with a new leader and new policies in the wind.

However, 2022 is unusual in that we're recovering from a pandemic; Reserve Bank Australia (RBA) interest rates have sat at a record low figure of just 0.1% for 17 months - and counting; and a federal budget has also just been announced.

And these are just some of the unique changes we're faced with this year and recently.

With this in mind as well as strong bipartisan support for property issues such as negative gearing and investor lending, Real Estate Institute of Australia's (REIA) CEO Hayden Groves believes buyers are bucking the trend of the traditional pre-election market slowdown.

"Australians are enjoying an ideal policy backdrop to support those wanting to buy or invest in property, with bipartisan support for negative gearing providing buyers with a stable environment and peace of mind," Mr Groves said.

Federal budget

Just weeks before the federal election announcement came the federal budget on Tuesday, March 29.

The applicable property news to emerge from the budget was further financial assistance for first-home buyers, single parents and regional residents.

A New Home Guarantee (NHG), specifically for first-home buyers buying or building a brand new home, was announced with 10,000 places available in the upcoming financial year.

Similar to the First Home Loan Deposit Scheme, the NHG enables buyers to purchase a home with just a 5% house deposit and no Lenders Mortgage Insurance (LMI), with the federal government's National Housing Finance and Investment Corporation (NHFIC) acting as a guarantor for up to 15% of the property's value.

The very similar and brand new Regional Home Guarantee will assist eligible homebuyers in rural and regional areas to purchase a newly built house.

Meanwhile, the Family Home Guarantee allows 10,000 single parents over four years to purchase a property with a 2% deposit with the NHFIC again acting as guarantor for up to 18% of the property's value.

Mr Groves said the budget was reassuring for homeownership as it dealt directly with inflationary pressures, contained a modest outlook for interest rates, and supported first homebuyers.

"The Federal Government has handed down a budget for the times and in a win for homebuyers, housing is at the heart of it," he said.

RBA cash rates

The RBA's extraordinary 0.1% cash rates has almost become old hat in the property market with CoreLogic research director Tim Lawless one of the many property experts who have predicted RBA will change its tune sooner rather than later.

But yet again this month, RBA governor, Dr Philip Lowe, announced this figure would not change.

"The RBA has stated it is prepared to be patient and make its decisions based on evidence rather than forecasts," Mr Lawless said.

"With this in mind, March quarter inflation data is released on April 27 and the March quarter wage price index is out on May 18.

"These two readings will be critical for providing some guidance on the timing of the first-rate hike."

Mr Lawless explained a higher cash rate was definitely a downside for the property market.

"It is likely indebted homeowners will need to dedicate more of their incomes towards debt servicing as interest rates rise, and we could see some renewed weakening in housing growth trends as interest rates lift," he said.

"A softening in housing values could also result from new housing demand falling, as the cost of mortgages rise and buyer hesitancy is higher during downswings."

Interest rates remain on hold but expect hikes

COVID property impacts

They say it ain't over till it's over - and with a fourth COVID jab recently announced for highly at-risk residents, who's to say when we'll see the end of this wearying pandemic, if ever?

However, the pandemic has certainly resulted in an amazing shift in property values and the market overall.

A CoreLogic report released last month revealed six major impacts the pandemic has had on the market since its first influx in March 2020.

These results include a 24.6% increase in housing values; a surge in first home-buyer activity; a record 11.8% increase in rents and a record low drop in gross yields; record housing debt levels with the total outstanding housing credit sitting at over $2 trillion as of January; a major gap between house and unit values; and of course, the extraordinary rise in popularity of rural and regional areas.

Notable news

Without a doubt, there is some good news to highlight at the moment.

Firstly, Australia's unemployment rate has fallen to just 4%, the lowest figure since August 2008.

As well, in the 2020-2021 financial year, residential foreign investment dropped to its lowest figure in over 15 years with just 4,384 approvals, worth $10.4 billion, recorded in this period, according to the latest Foreign Investment Review Board's annual report.

This is a decrease of nearly 40% compared to the previous year.

So, while many international borders are now opening after (hopefully) the worse of COVID restrictions, now is a great time to take advantage of the lack of foreign competition.

We're here to help

Cautionary times such as the coming months in and around the election along with major capital city markets already softening may well be the time to plunge into the property fray.

Those who do so may experience less competition from those holding back.

Those who hold back may wish they hadn't done so.

But whichever road you choose, we're here to help.

We can advise you on which first home buyer mistakes to avoid or just give you some guidance to figure out your next property move in this holiday season.

So whether you're an experienced buyer, a savvy investor or someone itching to purchase your first ever property, don't delay!

You can snap up a home before other buyers by accessing off-market, pre-market and secret listings at Listing Loop just by logging in to your own personal property hub.

And if you're not a member, just sign up for free at Listing Loop or download our app.

We haven't forgotten sellers either. We help you find the best possible agent and reach buyers first.


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