Is 2022 the Right Year to Buy That Investment Property?

Property investors are poised to purchase homes and apartments in 2022, encouraged by low interest rates and tight rental vacancy rates.

However, experts are saying that it won’t be all rosy, with both federal and state elections bringing uncertainty to future landlords and still unclear housing policies. There is also a potential increase in interest rate, which could be forthcoming due to inflationary pressures.

Interest rates may not increase straightaway, but stricter lending regulations enacted in 2021 have already resulted in investors not getting a mortgage easily. Thankfully, that hadn’t yet brought a significant effect on the number of people who are considering investing.

Amendments to loan regulations, including how debt to income ratios are calculated, (the amount a person is allowed to borrow depending on their income), and of interest rate buffers that ascertain whether a borrower can pay mortgage if interest rates increase by 3%, had seen the amount that could be borrowed decline by 5- 10%.

Though budgets are slightly declining, a fairly decent amount of confidence remains, with people still keen to invest. That confidence comes on the back of an excellent year for investors, with the volume of new loan commitments rising by 89.6 percent across the year to October 2021 according to the Australian Bureau of Statistics.

In October, $9.73 billion in new loan commitments for investment properties were reported, even with the hit to rental markets in Sydney and Melbourne.

Apartment rents in Sydney declined by 2% over 2021, while house rents increase as people search for larger properties during the pandemic.

Both the Sydney and Melbourne markets are dependent on foreign migration to fill rental vacancies, including foreign students who were locked out of the market because of COVID-19.

An increase in tenant numbers is forecast for Sydney and Melbourne as foreign students, tourists and workers are allowed back in, providing an opportunity for properties in the city to rebound.  I’m already seeing an influx of overseas students looking for apartments in Newcastle and I have plenty of qualified prospects who have missed out on recent rental listings.

Airbnb demand could also return to pre-pandemic levels, giving investors entry back into the short-stay rental market.

Plus with the reopening of borders, rents may increase. However, the increase may not be much until migration goes back to normal levels. 

Searching outside our city and in suburban areas, where the properties are bigger, would help pull in tenants who are looking for larger space.  Especially for those who are still working from home.

Investors should see more opportunities with a balance of supply and demand as more homes becoming available across Newcastle.

The number of homes for sale dropped 20-40%, depending on the location, with sellers delaying their listing during 2021 due to the lockdowns.  That’s one of the reasons why we are seeing more new listings now!

With supply and demand starting to become more balanced, the hope is that many property owners who held off during the pandemic will finally list for sale providing more options for home buyers and investors. 

The problem is this may not eventuate as we know from experience and history that sellers are likely to hold off until the state and federal elections are over!

I guess, time will tell!  My recommendation to you, is to list anyway.  The buyers will still be there as people still need to move.  Think about it, some are going through breakups, some are downsizing, others need to move to be closer to infrastructure like transport, hospitals or schools.

What’s your situation and do you know what your property is worth in today’s marketplace?

I’m available for a 15-20 minute confidential market appraisal appointment if you are interested.  Just let me know!



Contact Annette Pinkerton directly on 0418447856 to book your appraisal.