Sydney house prices predicted to rise by $102k in 2022

House prices around Australia are still expected to jump by staggering amounts, but there are some signs the market is starting to cool.

House prices could rise by $102,000 by the end of next year due to the reopening of international borders, according to experts.

They have forecast an 8 per cent increase to house prices in Sydney taking the current median value up to $1.37 million by the end of 2022.

In this month’s Finder RBA Cash Rate Survey, 38 experts and economist predicted Melbourne would experience a 9 per cent increase making houses $74,800 more expensive next year. Brisbane houses were also expected to jump up 8 per cent costing home buyers $50,000 extra by 2022.

Darwin had the smallest increase at 4 per cent meaning a jump of $24,000 to buy a home in the Top End by next year.

Meanwhile, Canberra house prices were expected to soar by $51,000, Hobart’s were predicted to rise by $36,000, Adelaide’s at $25,000 and Perth at $24,000 by the end of next year.

Figures from the Australian Bureau of Statistics have revealed Australia’s average first-home debt is $53,000 higher than a year ago. Picture: Nikki Short/NCA NewsWire

Graham Cooke, head of consumer research at Finder, said the current house price surge was being driven by both owner-occupiers and local investors.

“The opening of international borders, and the return of potential overseas investors, may well re-fuel the market even further,” he said.

Mr Cooke said the average homeowner in Sydney is due to make a whopping $342,306 over 2021 and 2022.

“Sydney homeowners stand to make an eye-watering 3.5 times the average household salary of $97,211 just on their property,” he explained.

“Melburnians are a distant second, with the average homeowner merely making 1.6 times the average salary.”

As many as one-in-five home buyers are potentially borrowing more than six times their income. Picture: Gaye Gerard/NCA NewsWire

Price guides pushing bank rejections

More than two-in-five economists in the survey believe that there has been an increase in banks knocking back loans due to final auction prices being higher than their own internal valuation.

Mr Cooke said it’s not surprising that banks are dubious about listing prices.

“It’s an agent’s job to garner as much hype as possible on their listed property. In turn this is putting more pressure on Aussie borrowers, and banks may be hesitant to take on extra risk,” he noted.

“The home ownership dream is clearly still alive, but housing affordability is making the dream more difficult to come true.”

But first home buyers are being pushed out of the property market due to increasing investor activity, more than half the experts in the survey said.

According to the ABS, Australian investors borrowed $9.75 billion in mortgage debt in September this year – the highest level in six years.

Australian investors borrowed $9.75 billion in mortgage debt in September this year – the highest level in six years. Picture: Getty Images

June through to August was the highest three month period in regards to the number of investor loans approved around Australia, with 55,680 loans approved.

“In 2020 investors were pretty cautious about property due to a number of pandemic-related policies that made it mostly unappealing to own a rental property,” Mr Cooke said.

“However investors have cautiously started stepping back into the market since the eviction moratorium expired in most states in September last year.”

Sydney price hikes slowing but other capitals speeding up

In some good news for those looking to break into the market, CoreLogic found that Australian housing values rose 1.5 per cent in October, almost half of the peak it reached in March of 2.8 per cent.

But the picture across the nation was very different depending on the city.

Perth recorded its first negative monthly result since June last year, with values dropping 0.1 per cent lower taking the median value of a house to $526,000.

Brisbane has beaten out Sydney by taking over as the fastest growing market with housing values up 2.5 per cent in October with the median value of a house now up to $642,000.

This was followed by Adelaide and Hobart, with both dwelling markets increasing

2 per cent in value over the month.

Brisbane house prices are growing faster than Sydney. Picture: Supplied

In Sydney and Melbourne, the monthly rate of growth has more than halved since the highs seen in March 2021, when they reached a monthly growth rate of 3.7 per cent and 2.4 per cent respectively, although median house values still sit at $1.07 million and $780,000.

CoreLogic’s research director, Tim Lawless, said slowing growth conditions were a result of worsening housing affordability, rising supply levels and less stimulus.

“Housing prices continue to outpace wages by a ratio of about 12:1. This is one of the reasons why first home buyers are becoming a progressively smaller component of housing demand,” he said.

“New listings have surged by 47 per cent since the recent low in September and housing focused stimulus such as HomeBuilder and stamp duty concessions have now expired. “Combining these factors with the subtle tightening of credit assessments set for November 1, and it’s highly likely the housing market will continue to gradually lose momentum.”

Unit prices growing at a slower rate. Picture: Gaye Gerard/NCA NewsWire

Units not performing as well

But house prices have skyrocketed on an annual basis.

Nationally, home values are up 21.6 per cent over the year to October, with half the capitals recording an annual growth rate in excess of 20 per cent.

Across the broad regions of Australia, regional Tasmania has led the nation for the pace of annual capital gains with dwelling values rising by 29.1 per cent.

However, it’s a different story for apartments, which have failed to match the soaring price rises of houses.

Sydney house values are up a stunning 30.4 per cent compared to a 13.6 per cent rise in unit values while in Melbourne, house values rose 19.5 per cent over the year compared with a

9.2 per cent gain in unit values.

“As housing becomes less affordable, we expect to see more demand deflected towards the higher density sectors of the market, especially in Sydney where the gap between the median house and unit value is now close to $500,000,” Mr Lawless said.