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Will House Prices Rise Or Fall In 2022


Traditionally, what goes up must come down – but given the state of our nation’s current house prices, will they ever really return to ‘normal’? 

Nationally, home values are currently up over 20% when compared to the same period just twelve short months ago. Considering the change in spending habits, shortage of building materials and just about everyone in the nation re-evaluating the quality of their lifestyle, buyers in particular have flocked to property in surprising numbers. However, with not enough supply to meet the increase in demand, house prices have skyrocketed in almost every pocket of the country. 

However, the latest forecasts combined with industry speculation have hinted that property prices may soon begin to finally stabilise. Depending on which side of the buying or selling fence you sit on, this news will either bring excitement or deflation – but when is this set to happen?

Dwindling House Prices Are On The Horizon 

To understand the likelihood of house prices falling in Australia anytime soon, we must first look back instead of forward. Long before the pandemic arrived on our shores, our economy was already showing signs of slowing down. Exacerbated by the effects of a “once in a generation” health crisis, other contributing factors included ongoing trade wars, heightened political uncertainty in a number of countries and a lack of manufacturing activity.

In an effort to stem this, the Reserve Bank Of Australia continued to drop interest rates to record lows in an effort to keep our economy moving – and it worked. Record low interest rates did their job when it came to supporting the national property market, with Australia currently in the midst of the biggest increase in the national house price average in seventeen years. 

Many would argue that it’s the record low interest rates that drove the property boom to the dizzy heights that it’s currently at now. With limited supply and ever increasing demand, in October 2021 the Australian Prudential Regulation Authority (otherwise known as APRA) took steps to help ensure that borrowers were capable of making mortgage repayments if – or perhaps, when – home loan interest rates rise. 

Previously, the minimum interest rate buffer on home loan applications was 2.5% points. In November 2021, this is set to increase to a minimum of 3%, and is a tentative step by the regulator to cool credit growth right around the nation. APRA estimates the small change to Australia’s loan servicing rules will reduce the average person’s maximum borrowing capacity by around 5%, with the intention being that they are somewhat protected from inevitable interest rate increases.

However, the Reserve Bank Of Australia governor Philip Lowe has also indicated that until inflation and wage growth stabilises, an interest rate hike is unlikely to be seen before the end of 2023 – defying the expectations of financial markets and industry experts alike. So long as interest rates remain at the record lows that we’re currently seeing, it’s unlikely that Australians will see house prices fall.

For those looking for an approximate date on when they can expect the real estate industry to simmer down, experts say that early 2023 is when we can all expect to see real change. According to new research released by The Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group, and National Australia Bank – otherwise known as Australia’s “big four” banks – when comparing to the current 20%, growth is set to slow to just 6% in 2022, before dropping again to 4% in 2023. 

Falling house prices will be linked to the tightening of lending criteria, increased interest rates, decreased affordability, state and international borders reopening, the construction boom stabilising, and the end of government stimulus packages. However, it’s not going to be until 2023 that we are allegedly going to start seeing a decrease in house prices, and we’ll need to see solid wage growth and stable inflation before it happens. 

Whether you opt to buy or sell property in the near or distant future, there’s a great number of variables to consider when determining if it’s better to wait or strike while the iron’s hot. For buyers in particular, the services of a reputable mortgage broker can help you to understand the ins and outs of the world of home loans and ensure that you’re matched to a product that’s best suited to your own individual set of circumstances – but where do you find one?

Finding Help With Navigating The World Of Home Loans 

The big attraction of buying your own home is just that – it’s yours, once you’ve paid back the banks of course. Apart from having somewhere to live, the quest for home ownership is also about having a long term investment strategy. If we’re looking at it from the viewpoint of decades instead of months, generally house prices do rise, and so does the value of your investment.

With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending & Finance, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best.

If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today, or call her directly on 0427 374 155 to bring your mortgage dreams to life.

Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.  Subject to lenders terms and conditions, fees and charges and eligibility apply.

Credit Representative 499652 is authorised under Australian Credit License 389328.