Apartment price growth could outperform house price growth in 2022: SQM

SQM Research’s base case forecast is for property prices to rapidly slow from the current annual 20%-plus growth rates

Apartment price growth could outperform house price growth in 2022: SQM
Apartment price growth could outperform house price growth in 2022: SQM

The national housing market is starting to show signs of a peak, according to the SQM Housing Boom and Bust Report 2022.

But 2022 should see a turnaround in the unit rental markets and unit price growth could outperform that of houses. 

"With houses being overvalued, apartments are relatively affordable and are expected to be in greater demand from an expected rise in net migration from interstate and overseas with Australia’s border now open," Louis Christopher, managing director of SQM Research said.

“As 2021 draws to a close, the national housing market is starting to show signs of a peak. 

"Auction clearance rates have fallen from their highs amid record listings. 

"However, we may also be recording some seasonality and pent-up selling after vendors held off listings during the lockdown. 

"Nevertheless, we expect the market to peak in 2022, with further expected intervention by APRA, which could come as early as next month, halting the price momentum."

SQM Research’s base case forecast is for property prices to rapidly slow from the current annual 20%-plus growth rates. 

The research house expects a slower rate of price rises over the first quarter of 2022, followed by price falls as early as mid-2022. 

The price falls will be led by Sydney and Melbourne houses, given a significant overvaluation. 

"These cities are the most are sensitive to even minor intervention by the banking regulator, the Australian Prudential Regulatory Authority (APRA) in home lending," SQM boss Louis Christopher said.

SQM Research forecasts Brisbane will record the largest dwelling price rises over 2022, with prices predicted to rise between 8% to 14%, with prices supported by expected strong interstate migration flows given relatively good housing affordability compared to Sydney and Melbourne. 

"This gain will nevertheless represent a slowdown compared to 2021 increases," he said.

“If the Australian housing market does not slowdown by mid-2022, APRA will likely keep intervening in home lending until the market does slowdown. 

"We cannot afford another year of 20%-plus gains across the national housing market. 

"And so, to ensure a soft landing for the market, it is best we see additional intervention sooner rather than later to reign in property valuations.”

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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