2022 Australian Property Market: What you need to know

The Australian property market is one of the most popular investment options in the world. But what can you expect from it in 2022? Here are three trends you need to know.

Increase in investor lending

With the real estate market booming in recent years, it's no surprise that loans for housing have seen a steady increase. In fact, at the beginning of 2022, total housing loans had risen by 2.6% to $33.7 billion, with investor home loans climbing 6.1% to a record $11 billion and owner-occupied mortgages accounting for 1% at $22.7 billion. Clearly, demand for housing is high, and lenders have responded by upping their game with increased competition driving down interest rates for investors to their lowest level in recent years. Overall, this indicates that the real estate market shows no signs of slowing down anytime soon, making now an excellent time to invest in a property or refinance your existing home loan. So if you're thinking about buying or selling a home, let us do the research for you and consider all of your options before taking the leap!

Borrowers are likely to struggle to access low deposit loans

For many Australians, the dream of owning their own home is quickly becoming out of reach. Property prices have been on the rise for the past few years, and there is no end in sight. The average house deposit is now over $100,000, which is a huge amount of money for most people. With the cost of living going up, and wages failing to keep pace, many Australians are finding it difficult to make ends meet, let alone save for a deposit.

APRA's guidance to limit high-Loan to Value Ratio (LVR) loans is a key strategy for mitigating housing market risks in the coming years. Though these restrictions may seem daunting at first, they are necessary to keep the housing market from overheating. Overall, APRA's efforts to tighten lending standards are likely to significantly impact borrowers nationwide, regardless of the state of their local housing markets. Whether you are purchasing your first home or looking for your next investment property, it is essential that you understand and comply with these new regulations. Talk to the Concise Finance Team today and let us do the groundwork for you. 

Interest-only loans disappearing 

As anyone who's been following the Australian housing market closely will know, interest-only loans have been on the decline in recent years. And it looks like that trend is set to continue in 2022, with new data showing that IO loan levels have hit record lows.

According to the latest figures from the Reserve Bank of Australia, only 14% of outstanding housing loans were on interest-only terms. This is a significant drop from the peak of around 40% back in 2015, and it's good news for those concerned about the sustainability of the housing market. 

There are a number of reasons why IO loans have been falling out of favour with lenders and borrowers alike. Firstly, the introduction of stricter lending criteria by APRA in 2017 made it more difficult for people to qualify for an IO loan. Secondly, as interest rates have fallen over the past few years, many borrowers have switched to lower-cost principal and interest loans. Finally, as a large number of IO loans taken out during the housing boom begin to expire, borrowers are finding it more difficult to refinance onto another IO loan. 

With all of these factors working against them, it's no wonder that IO loan levels have hit record lows.