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Is 2022 the ideal time to buy a home?

- January 27, 2022 3 MIN READ
Is 2022 the ideal time to buy a home

The Aussie home market is changing, so is this year the ideal time to buy a home? WLTH’s Brodie Haupt walks us through the landscape.

With a new year among us, many Aussies are starting to review their new year’s resolutions and consider how many of them are actually achievable in this current economic climate.

One that is on most property ladder climbers‘ and first time home buyers’ lists is the goal to purchase a home this year.

Is 2022 the ideal time to buy a home? Timing is everything in real estate. For both the sale price of a home and your chances of buying a home at an affordable price in a competitive market.

Here is a glimpse into some of the factors that may impact the affordability of homes in 2022, and whether it’s a prime time to buy.

Omicron impacts

The Delta outbreak fuelled a surge in house prices across the country, however, the current Omicron variant outbreak is having a very different impact on the current housing market.

Despite the record daily case numbers that have wreaked havoc for retail and hospitality businesses, the property market has remained largely unaffected. This is despite thousands in isolation impacting supply chain issues.

While many of the markets were impacted by the recent COVID-19 outbreak, it appears to remain business-as-usual for the Australian property market.

The market looks to follow price increases, but the growth rate is slowing a touch from where it sat at the peak last year.

Will the housing market cool down in 2022? Insights from WLTH’s CEO

Interest rates, buyer demand and tighter lending standards

Australia’s booming housing market is set for an inevitable slowdown this year. Easing buyer demand, affordability constraints, tighter lending standards and an increase in homes for sale are all expected to bring an end to rapidly rising prices.

With more properties expected to hit the market, buyers now have less competition and “FOMO”. There’s more room for choice and more time to make a decision.

Regarding interest rates, the current record lows are unsustainable and likely to rise, according to recent APRA announcements. This consequently may cause prices to flatline by the second half of the year. The CBA’s head of Australian economics, Gareth Aird, believes interest rates will help settle the market in a few years’ time.

Last year, the Big 4 Australian banks had to model a borrowers’ ability to manage a 3 per cent increase in mortgage rates. This was up from a previous buffer of 2.5 percentage points to respond to rising debt levels.

These banks are also continuing to raise their fixed rates from historically low levels. This should, in turn, help slow the growth in house prices and give younger Australians a better chance to jump onto the property ladder.

If you are a buyer who passed the strict lending tests, you are in a stronger position in 2022. The main question you should ask yourself is whether you have the ability to sustain repayments in the divergent economic recovery attributed to the cash flow losses caused by COVID-19.

Going coastal or bush vs the city

The market will continue to see Australians seeking out coastal and bush locations, with regional popularity continuing to boom.

In Sydney and Melbourne, house prices are tackling near historical highs relative to other capitals. As a result, many Aussies are now struggling with an affordability crisis and instead cast their nets to more affordable suburbs or capitals.

For example, Brisbane prices are tracking near historical lows, presenting exceptional value compared to the city’s coastal cousins. Queensland’s capital city is predicted to increase by 14 per cent in 2022.

Will 2022 be the time to buy? It’s hard to say just yet, but it’s definitely an interesting time for first home buyers to keep their eyes peeled for opportunities.