Real estate: John McGrath predicts when Australia’s hot property prices will cool down

Real estate influencer John McGrath has revealed his thoughts on when Australia’s hot property prices are likely to cool down.

Booming property prices are set to “take a breather” and the market is likely to “correct” itself by early 2022, according to real estate influencer John McGrath.

Speaking at AREC, the Australasian Real Estate Conference he founded 23 years ago, McGrath told a 3000-strong crowd, both live and virtual, that the post-Covid-19 chaos had changed consumer demands of the real estate industry forever.

The founder and executive director of McGrath Estate Agents had not spoken at an AREC event since 2014, but this year shared his insights of a 40-year career in 40 minutes.

In addition to his motivational speech encouraging real estate professionals to beat impostor syndrome and “tell the damn truth”, Mr McGrath gave his property predictions for the year ahead.

“Markets go up, but markets also come back. Don’t panic that this market is going to continue forever,” he told News Corp exclusively.

“I’ve been through about six or seven cycles now and inevitably there comes a point of pause and inevitably there will be some level of correction,” he said.

Booming property prices are set to “take a breather” and the market is likely to “correct” itself by early 2022, according to real estate influencer John McGrath. Picture: Social Focus

While the unprecedented nature of Covid has impacted property prices, Mr McGrath said there are other more predictable factors at play.

“Low interest rates are clearly another major driver, but so is the shortage of listings. Those things are not unique, we’ve seen them before,” he said.

“There is some underlying increase in values, without a doubt, but on top of that increase (which is sustainable and will remain) there are some crazy results happening that are likely to come out of the market,” he explained.

He said that stories of extraordinary results which saw some homes selling for hundreds of thousands – or more than a million dollars – over expectations, were likely fuelled by post-pandemic emotions.

“You might just have had two people who were desperate – and wealthy – saying ‘We’re just going to keep bidding. We’re selling out of Sydney and buying into the Gold Coast and our house just sold for $5 million. We’re going to pay what we’re going to pay.’” he said.

But the overheated sellers’ market won’t last forever according to Mr McGrath.

“It will definitely slow down. Some of the crazy figures, we won’t see them as much, but we’ll still see a healthy market. People love property in times of desperation, they know it is one asset they can rely on,” Mr McGrath added.

Mr McGrath’s advice is for buyers to meet their own budget, not the market. Picture: iStock

Although he predicts a slower market, he said prices won’t fall off a cliff.

“This is unsustainable indefinitely. The question is, what’s the point and by how much is it going to come back by? My feeling is the market is going to remain solid for the rest of this year. The market might take a breather probably early next year,” he said.

For buyers experiencing FOMO in the midst of a hot market, Mr McGrath said patience is a virtue.

“Don’t think you’re never going to be able to get in. I don’t think the market’s going to go back by 20 per cent – I wouldn’t be banking on that – but if what you’re after is just out of your price range maybe you have to be a little patient,” he said.

His advice is for buyers to meet their own budget, not the market.

“Never overstretch yourself because at the end of the day there’ll be a home that suits your budget. Whether that’s the exact one you want, or you have to change location or compromise somehow. The worst thing in the world, is buying your dream home then living a nightmare whilst within it,” he added.

Mr McGrath is one of 43 speakers presenting at the sold out two-day conference at the Gold Coast Convention and Exhibition Centre. Day two will include virtual speeches by New York Times best-selling author Gary Vaynerchuk and entrepreneur Elle Macpherson.

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Originally published as Real estate: John McGrath predicts when Australia’s hot property prices will cool down