Border reopening and property prices: Expert predictions for 2022

As students, expats, visa holders and other travellers begin coming into Australia again, are we going to see an impact on property prices?

A number of economists predict that property prices will fall next year. Westpac has released very sharp predictions of a 14% price slump while ANZ forecasts around 6% in value decreases in 2023.

Property markets have boomed over the last 12 months in the absence of overseas and expat buyer numbers. Numbers dwindled to the point where fewer than 2% of auctions were from international buyers, reports Ray White.

But now that borders are open to expats and foreign buyers from across the globe, including the USA, Canada, United Kingdom, Singapore and Japan, what is expected to happen to the property market?

"Short-term… property values unlikely to increase"

Property expert Michael Yardney, director of Metropole Property Strategists, says that with our international borders opening, it's likely that an extra 200,000 people are going to be looking for accommodation over the next year.

"New immigrants will usually initially rent for a few years while they find their place in our society," Yardney says. "With vacancy rates currently at historic lows, the old supply and demand ratio will ensure rents increase, and this in turn is likely to entice investors back into the market. However, in the short-term, these factors are unlikely to increase property values."

"Over the last 2 years, apartments in our CBDs, particularly Melbourne and Sydney, and around our universities have suffered excessive vacancies and falling rentals because of lack of overseas students," he adds. "This will be reversed as foreign students return to Australia – and I see 2022 as a year of rental crisis as our borders open and our rental markets are flooded with new tenants."

"People flocking to Queensland"

Overseas buyers are already showing interest in Queensland, says Ray White New Farm principal Matt Lancashire.

"The market in the area has been super strong. We've got a huge amount of interstate and overseas interest from expats," Lancashire says.

"The continuation from expats coming home from Singapore and Hong Kong has been really strong, as well as our Sydney and Melbourne buyers migrating north. The trend is continuing if not even stronger than last year, there's no sign of slowing down at all."

"I have no idea where these people will live…"

"The biggest benefit to Australia will be having more skilled labour to fill the 230,000 jobs currently advertised but unfilled – a record high. Improving the nation's ability to provide more goods and services will further strengthen the already strong foundations of property markets," says Propertyology's head of research, Simon Pressley.

"I have no idea where these people will live, though. Today, there is a combined 33,469 dwellings advertised for rent in Sydney and Melbourne, while the 15 million Australians that live in the other 6 capital cities and 400 regional locations have a total of only 14,508. People are already living in caravans and tents."

"Expect a less heated market"

Reece Coleman, head of buyer's agency Maker Advisory, believes there is good news ahead for buyers and investors.

"Buyers can expect a less heated market as 2022 progresses, while investors will benefit from rising rents with the return of international migrants, students and reverse sea and tree changers, along with the emergence of new investment hotspots," he says.

"Other trends include growing demand for townhouses and inner-city apartments, and dampened activity in the renovation and new home build sector owing to rising material costs and labour shortages."

"Just a temporary glitch"

The main economic factor that changes our property markets is that of simple supply and demand, explains Chris Gray, investment property expert and CEO of Your Empire.

"If borders open, students come back, expats come back and we have more business entries, then yes, many of our property markets should see more demand and higher prices both for rental and purchases prices," he says.

"I've got a very small 3-bedroom unit that used to be a 1-bedroom unit and a garden shed in the middle of one of my blocks. It's on the ground floor and it has very little light. For the last 10 years, it has rented very well and the students are happy to miss out on natural light and a large unit to be close to the beach. However, it's been very hard to rent recently, as the students and backpackers haven't been around. It's just a temporary glitch though, as markets will soon rebound."