A new forecasting report has been published that seeks to assess the market conditions for property investors going into 2022.
Peter Koulizos, CEO of the Property Investment Professionals of Australia (PIPA) was one of the major contributors to the report, and spoke to Australian Broker about what investors and the brokers that they use should expect from the year to come.
“We’ll still have a positive year, and property prices will still go up, but not at the same rate that they have in 2021,” said Koulizos.
“What will happen is that, while the RBA will probably not increase the cash rate in 2022, I can see banks increasing their interest rates and certainly their assessment rates.
“That will make it harder for people to borrow money, and those people that can borrow will be able to borrow less. That will put a cap on property prices.
“We’ve already seen an increase in supply of listings – a number of property data firms have stated that new listings have increased significantly.
“Even though overall listings might be below the long term average, if new listings are up then it won’t take a long time for overall listings to get back up.”
Overall, Koulizos saw the market returning a state that was closer to what it had been before the pandemic and the ultra-low interest rate, rapid price acceleration era that has present in the last two years.
“We’ll get back to a more normal market,” he said. “Brokers have had two very good years, as far as business is concerned, because we’ve had a very high number of transactions despite the limited number of properties on the market.”
“It’ll be back to the way it used to be. One of the triggers will be that, when the cash rate finally goes it, it will spook people.
“That’ll be the first time the cash rate has gone up in 11 years. It doesn’t need to do much: it might go from 0.1% to 0.25%, and even though banks will increase their interest rates, it won’t have as many headlines as when the RBA lifts up the cash rate.
“Most people don’t know what their interest rate is, but they would know what the cash rate is. Investors might want to consider fixing their rates, because it’s not often that fixed is below variable.
“Even now that banks have lifted their fixed rates, they are still well below the variable rates. For those that want to mitigate their risk, then that is one thing that you can do.”
