Is This the Year For First Home Buyers?

January 12, 2022
foreclosure and mortgagee repossession

In reflection of the current state of the Australian housing market, regret resides within many who did not purchase a home in 2020, a time where first home buyer fiscal incentives and strong income support was provided throughout the pandemic.

Fast forward to 2021 and we saw the fastest house price surge (22.1%) since 1988, driving first home buyers out of the market. So is 2022 now the year for first-timers?

According to leading property data providers and major banks, house price growth for 2022 is projected at 5-6% (CoreLogic), 8% (Westpac), 6% (ANZ), and 4.9% (NAB).

Demand-side factors impacting 2022 market

So while house prices are not necessarily set to decline, on the plus side, price growth is projected to be remarkably slower than 2021. This is due to tighter lending standards and the fading effects of easing monetary policy (record low interest rates and a $4 billion bond-buying program) and easing fiscal policy (housing fiscal incentives) on demand.

In addition, while house price growth has outpaced wage growth, this has posed affordability constraints, further placing a further downward pressure on housing demand and therefore price growth in 2022.

Supply-side factors impacting 2022 market

soho app live home auction

The scarce availability of houses on the market in 2021 was largely underpinned by buying competition and fear-of-missing-out (FOMO) sentiment. This is the notion of having a desire to purchase property before prices forever continue to increase.

If you’re a disgruntled buyer attempting to enter the housing market but struggling to find limited property available within your price range, there is good news for you. In 2022, housing availability is expected to increase, contributing to a slower rate of house price growth.

This year, we have already seen appraisals that determine the number of homeowners considering listing their properties for sale, elevate, meaning greater choice for buyers and ultimately placing a downward pressure on price growth this year.

Conversely, times may be difficult for those looking to enter the rental market. With international borders set to open in February 2022, rental supply is expected to tighten with the return of skilled labour immigration, particularly for inner Melbourne and Sydney’s city and east.

So should you buy now or wait?

While prices aren’t likely to decline in 2022, they’re expected to dip in 2023. That may seem like a while to wait, however, until inflation sits within the Reserve Bank of Australia’s (RBA) 2-3% target range, the cash rate is unlikely to be adjusted from its all-time low of 0.1%.

Once cash rate adjustments are made and taps are closed on Australia’s $4 billion bond-buying program, we may see an improvement in the affordability of houses for those seeking to enter the market for the first time.

Until then, first home buyers are likely to be side-lined by investors who are reaping the returns of growing equity.

Want to stay updated?

Get registered on Soho. You can also check out Alexandra’s other articles like To Rent or to Buy? on Soho.

Not only are we finding you your dream home, but we’re also helping you save for it and decorate it! So don’t forget to swipe on your property matches so we can get you there faster.

Alexandra Colalillo
Alexandra is an economist and manager at a multinational professional services firm in Western Australia. A key part of Alexandra's role involves assisting clients when responding to fluctuating economic conditions and building strategies to minimise financial and operational uncertainty. She also hosts her own economics podcast - 'The Shady Economist' - designed to break down topical Australian economics and geopolitics.
Share this article
Don’t waste time searching for a home. Let our AI do the work


Soho logo

Our AI match engine will match you with over 150,000+ properties and you can swipe away or shortlist easily. Making your home buying journey faster and easier 

Soho logo
Our AI match engine will match you with over 150,000+ properties and you can swipe away or shortlist easily. Making your home buying journey faster and easier.