Could investors make it harder for you to buy a home in 2022?

Posted: 13 December 2021 4:37 pm
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Investor activity is up 90% compared to this time last year. So what does this mean for the property market?

Is increased demand from investors set to drive prices higher? Or is property price growth set to settle down in 2022?

Graham Cooke, FinderAccording to our own Graham Cooke, head of consumer insights at Finder, investors are definitely driving the market forward right now.

"Owner-occupier FOMO has petered out somewhat, but investor dollars are replacing it," he says.

"Investors have been steering clear of the housing market for some time, driven by disincentivising regulation, falling rents and an uncertain future. It's clear they are back with a bang and we could very well be returning to the days of an investor-driven property market."

Australian Bureau of Statistics (ABS) stats at a glance:

  • Investor loans total $9.7 billion for October 2021.
  • This is up 0.4% month-on-month – but 90% year-on-year.
  • Number of investor loans accounted for 33% of all new housing loans in October.
  • Average investor home loans reached a record high at $530,312.
  • This is a 13.7% increase compared to October 2020.
  • Value of owner-occupier loan commitments fell for the fifth consecutive month.

Source: Australian Bureau of Statistics

Will investors drive more price growth?

This surge in investor activity is likely to "keep upward pressure on house prices" in the short term.

However, Cooke clarifies that it is unlikely to result in the same growth we saw in 2021.

Some of the big banks have already put their property price predictions on record, with CBA suggesting growth of 8% in 2022, and Westpac putting it around 7%.

Cooke says this growth – modest by comparison to the double-digit growth many areas experienced in 2021 – is enough to keep investors active.

"Investors are coming back now because of very visible stability. With borders set to open to overseas students, price increases stabilising and the economy looking to have weathered the brunt of the lockdowns, it looks like a relatively low-risk market to get into right now," he shares.

"I see the investor sector of the market increasing again in 2022 – as this data will likely signal to other potential investors that they could be missing out – especially if the Omicron variant turns out to be very mild."

Australian property price growth is slowing, slowing… gone?

Which suburbs are in high demand?

Ayre Real Estate Adrian WilsonSydney city apartment specialist Adrian Wilson, founder of award-winning agency Ayre Real Estate, says that with investors so active in the market, he expects the city and inner city suburbs to be in growing demand as we head into 2022.

He also points to good quality apartments as regaining popularity now that international borders have reopened and students can enter the country again.

"Buyer confidence will continue to grow, which has already been evident during the spring market. We're predicting a better flow of new listings and an increase of buyer activity due to [people] being freely able to go out and view properties, thanks to easing restrictions," he says.

"Our belief is that … investment loan [growth] will likely surge as rental yields continue to improve. We're also predicting that the trend of suburban homes will continue however we believe the pendulum of buyer interest will swing back to centre as the Sydney city precincts and shopping areas reopen."

Over the past 6 months he has seen an uplift in inquiry for city pied-à-terre apartments, he adds, as many buyers who fled to rural or outer suburbs have decided they still want a home in the CBD to stay connected to the city's economic and cultural hub.

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