Insignificant impact from Omicron
Pete Wargent, co-founder of BuyersBuyers, Australia’s first national network of property buyer’s agents, says the Omicron strain of the coronavirus will have a negligible impact on the trajectory of the housing market.
Mr Wargent said, “to a certain extent, the last couple of years should have reminded us that making predictions is very hard, especially when they are about pandemics or the future. But, that said, there’s little to indicate that the latest strain of the virus will have any meaningful impact on housing market trends.”
“After an initial wobble, stock markets have been resurgent, and financial markets have been largely unperturbed, which is likely to be a better indicator than the latest alarmist headline.”
“Financial markets are possibly factoring in the various news about the lack of serious cases of the latest strain to date, with many reporting mild symptoms. However, case numbers seem to be increasing rapidly, which could delay the full reopening of the international borders into 2022”.
“Moreover, a look back at how the housing market fared through the past two years suggests that there are more crucial factors at play than the latest strain of the virus, such as the cost of mortgage debt and the supply of properties being made available for sale” Mr Wargent said.
Cooling naturally
BuyersBuyers co-founder Doron Peleg said that a cooling of the housing market was inevitable in 2022 after a storming year in 2021. Still, the latest virus strain wasn’t a key factor in his forecasts.
Mr Peleg said, “a range of factors combined will help to take the heat out of the housing market in 2022, such as gradually rising mortgage rates, more vendors looking to lock in gains, and more cautious buyers as affordability bites following the strong price gains of 2021”.
“The rate of immigration has not been a key factor in driving the market over the past couple of years, with the notable exception of CBD and some inner-city apartments, where the absence of international students has been felt particularly keenly.”
“Remember, though, that the closure of the borders didn’t lead the doomsday outcomes many commentators predicted, partly because corrective policy measures were taken” Mr Peleg said.
“All eight of the capital cities recorded double-digit price gains over the year to September, with most recording price rises of about 20 per cent or higher”.
Figure 1 – Capital city housing prices
Population growth to resume
Pete Wargent of BuyersBuyers said that buyer sentiment has been broadly unchanged by the latest virus developments.
Mr Wargent said “there is less fear of missing out in the housing market now. But the pattern of housing trends through the pandemic has taught more buyers to look through the short-term noise and to buy quality properties when they can while taking a medium-term outlook.”
“We wouldn’t be surprised to see employment surging towards a record high approaching 13½ million through 2022, with the economy likely to grow by about 5 per cent per annum for the next couple of years, in turn helping to push the unemployment rate down to 4 per cent for the first time since the mining boom go-go years”.
“There might be a delay in the rebooting of immigration due to Omicron. But looking through the noise, population growth should be back to over 300,000 per annum whenever travel does become easier, and potentially even nearer to 400,000” Mr Wargent said.
