Written by Bethany Hemsley,
12th January 2022

The Australian property market was sizzling in 2021, rising a staggering 22% year-on-year. But what are experts predicting for 2022? We look at the latest forecasts from the major Australian banks…

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What are the experts saying?

Economists at NAB (National Australia Bank) believe property prices will continue to rise in 2022, but not nearly as much as in 2021. The bank has predicted a 5% rise as the effects of low interest rates and pandemic-related financial support begin to diminish.

Nonetheless, other major banks are predicting prices may start to fall towards the end of the year and into 2023.

ANZ anticipate a 6% rise in house prices in 2022 but expect the market to cool slightly in 2023, with a 4% drop.

The Commonwealth Bank have similar predictions. They predict property prices to rise by 7% in 2022 but to fall by as much as 10% in 2023.

Similarly, Westpac forecast an 8% rise in 2022 and a 5% fall in 2023.

australian property market

Experts predict prices to continue to rise in 2022 before falling in 2023.

The relationship between house prices and interest rates

Australia’s 2021 property market has been described by some as a “once-in-a-generation” boom. The main reason for this? Record-low interest rates.

Cash rates of just 0.1% led to a surge in borrowing in 2021, and it is unlikely house prices will come down until interest rates rise.

It is Australia’s central bank, the Reserve Bank of Australia (RBA), that oversees these rates; however, it has said that it won’t consider hiking rates until the first half of 2023. Nevertheless, some major banks and economists believe the RBA may have to raise rates sooner than this if inflation rises faster than expected.

In the meantime, fixed mortgage rates already appear to be rising, which may help to ease rising property prices.

What are the current average house prices in Australia?

As of December 2021, the national average price for a home in Australia was $709,803.

Looking at the country’s cities, the most expensive place to buy a property is Sydney. Average property prices there are $1,098,412, 25.3% more than in December 2020.

Other high-priced cities are Canberra ($894,338), Melbourne ($795,108) and Hobart ($694,261). Hobart saw a huge 28.1% annual rise in property prices in 2021.

Darwin, Perth and Adelaide are all slightly more affordable with house prices costing $498,168, $528,551 and $569,882 respectively.

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