Property Hub - Investment Insights & Inspiration - Get Invested: Summer Series: 2022 BMM housing market forecast report

Episode Date: February 11, 2022

Where can you find the best independent forecasts and information for the year ahead in Australian property? As we continue our summer series in partnership with Realty Talk, Australia’s top online property show hosted by Bushy Martin, where we’ve been talking with independent industry leaders about where Australian property is heading in 2022, this episode we share insights from the 2022 Bricks & Mortar Media Property Market Forecasts report. We kick off with an introduction and overview of the report by BMM’s Nicola McDougall, before sharing individual property projections by the Chair of the Property Investors Council of Australia, Ben Kingsley. This is followed by a great chat with Kevin Brogan from national valuers Herron Todd White who makes us aware of VESPAs, so you’ll have to listen in to find out what this is. Rich Harvey from Property Buyer then rounds out the show with his forecasts on what’s likely to occur on the east coast and beyond, in contrast to pessimistic outlooks by many bank economists. And if you want to read all of the details from these and a host of other property experts, grab yourself a copy of the full BMM report by clicking here. Join the Get Invested community: And if you want to continue investing in your knowledge, join me and many other like minded investors in our Get Invested community right now. I send a free and exclusive monthly email full of practical ‘Self, Health and Wealth’ wisdom that our current Freedom Fighter subscribers can’t wait to get each month. It’s full of investment and lifestyle tips, my personal book recommendations, apps I use to enhance life and so much more. Just visit bushymartin.com.au and sign up at the bottom of the page … because this is just the beginning! Get Invested is the leading weekly podcast for Australians who want to learn how to unlock their full ‘self, health and wealth’ potential. Hosted by Bushy Martin, an award winning property investor, founder, author and media commentator who is recognised as one of Australia’s most trusted experts in property, investment and lifestyle, Get Invested reveals the secrets of the high performers who invest for success in every aspect of their lives and the world around them. Remember to subscribe on your favourite podcast player, and if you're enjoying the show please leave us a review. Find out more about Get Invested here https://bushymartin.com.au/get-invested-podcast/  Want to connect with Bushy? Get in touch here https://bushymartin.com.au/contact/  This show is produced by Apiro Media - http://apiropodcasts.comSee omnystudio.com/listener for privacy information.

Welcome to the Get Invested Podcast, where we share great conversations with experts from all walks of life to uncover their secret know-how and where they invest their time, their skills, and their money, and the benefits that this has created. You see, the truth is that everyone invests. Every minute of every day, we're investing our time, our skills, our energy, and our money in something. Some of us are investing consciously, some unconsciously, sometimes for good, sometimes for bad and sometimes for no impact. Get Invested will help you to start living by design,

not by default. I'm going to help you to make it happen, not let it happen. You'll hear the top tips on how you can live with conscious intent so that you can live more, work less and leave a living legacy by investing now. Listen to the show to discover the top tips on how to get started, make the most of your investment journey and ultimately to be living your dream, not someone else's. More episodes can be found on iTunes or at bushymartin.com.au forward slash getinvested. Thanks for listening and now let's get invested. Hi, freight and fighters. What's going to happen with property this year? It's a question I've been asking a number of industry leaders over the last few weeks

and this week we conclude our special summer series of special shows that will open your eyes and ears to potential property opportunities in the year ahead. So if you're wondering what's in store for property across the country in 2022, you're in the best place to find out. And today you'll get to hear my recent Realty Talk interviews with a collection of the country's leading property commentators to unpack all the gold from the just released 2022 Bricks and Mortar Media Property Market Forecast Report. Now there's a mouthful. And we kick off with an introduction, an overview of the report by BMMM's, I'm having fun today. I've got another set of false teeth, I think. We start with an overview

of the report by BMMM's Nicola McDougall. Before sharing individual property projections by the chair of the Property Investors Council of Australia, Ben Kingsley. This is followed by a great chat with Kevin Brogan from National Valuers Heron Todd White, who make us aware of Vespers, so you'll have to listen to find out what that's all about. And Rich Harvey from Property Buyer then rounds out the show with his forecast on what's likely to occur on the East Coast and beyond, which is in contrast to pessimistic outlooks by many bank economists. And if you going to read all of the details from these and a host of other property experts, grab yourself a copy of the full BMM report by clicking on the link on the Realty homepage at www.realty.com.au.

And while you're there, make sure you subscribe to Realty Talk, which you can hear and see on Apple Podcasts, Google Podcasts, Spotify, YouTube, or wherever you're watching and listening. And make sure you sign up on the realty.com.au homepage to make sure you get every episode in your inbox every week. Now today, you get to enjoy a collection of great property insights from commentators who've proved to be consistently reliable over the years. So if you're looking to make better educated property decisions in the year ahead, then you're really going to enjoy these great chats with Nick and Amok Dougal, Ben Kingsley, Kevin Brogan and Rich Harvey. Greetings and welcome to Realty Talk, your trusted voice for all things property.

On behalf of Kevin Turner and the entire Realty family, we hope you've enjoyed a great new year and are looking forward to the year ahead. I'm Bushy Martin from KnowHow Property Finance and this week we continue our series of special shows that will open your eyes and ears to the potential property opportunities in the year ahead. So if you're wondering what's in store for property across the country in 2022, you're in the best place to find out. And today in the first of another special two-part series, I interview all of the country's leading property commentators to unpack all the gold from the just released 2022 Bricks and Mortar Media Property Market Forecast Report. We kick off this week with an introduction and overview of the

report by BMM's Nicola McDougall, before sharing individual property projections by the Chair of the Property Investors Council of Australia, Ben Kingsley. This is followed by a great chat with Kevin Brogan from National Values Heron Todd White, who makes us aware of Vespers, so you'll have to listen in to find out what that is. Rich Harvey from Property Buyer then rounds out the show with his forecast on what's likely to occur on the East Coast and beyond in contrast to pessimistic outlooks by bank economists. And if you want to read all the details from these and a host of other property experts, make sure you grab yourself a copy of the full BMM report by clicking on the link on our homepage at www.realty.com.au.

Stay with us after this short break to enjoy these surprising and informative insights. Hi, and welcome to Realty Talk. Now, who would have predicted that property prices would go supersonic across the country over the last 12 months? Well, interestingly enough, Brixen Mortar Media's 2021 property forecast report captured predictions from industry leaders that consistently proved to be on the money. So what does the future for the property look like in 2022? Well, to help you with this, Nicola McDougall and the Brixen Mortar Media team have again interviewed the industry's leading lights to produce the 2022 BMM Property Forecast Report and Nicola now joins us to share her overview. So welcome to Realty Talk Nicola.

Welcome and happy new year. Yes same to you. If last year was any indication then this year's going to be a fun time in property as well. But before we sort of get into some of that Nicola talk to us about why BMM has decided to produce these forecast reports and what's the format like look like for this year i think as you said uh second year in a row that we've produced this report forecasting you know the coming year including this year 2022 i suppose the genesis of it if i'm going to be completely honest with you was uh probably a little bit of annoyance uh in 2020 when we were seeing some of those outlandish uh forecasts that were coming out uh you know at the beginning of the pandemic even during the you know sort of midway through 2020 and um you know

We like to think that we've got a great number of expert clients, including obviously PIPA, and there was a lot of experts that were actually going out there saying things counter to that, but we weren't getting a lot of airtime, no one believed us, that sort of thing. So I guess it's us kind of going on the front foot, providing expert commentary from people that are experts in property investment that are not in the finance sector or things like There's people that are actually bona fide or qualified property investment advisors and experts, and that's why it came about in 2020. Obviously, for 2021, now we have the 2022 report, and thank you for saying in the beginning that, you know, we did actually, many of our clients did forecast very, very strong growth last year. Yeah, no, it was absolutely spot on the money.

So delving into a bit of a review of last year then, Nicola, how did property perform against the BMM report's overall view for 2021? Look, you know, the report features, you know, 12, I think we had 14 forecasts last year. This year we had 15. And we have a lot of national forecasts, some for Sydney, New South Wales, Queensland, et cetera. So, you know, the majority of people last year for 2021 were talking

about very strong growth predicted. I'm not too sure that anyone probably forecast what actually would happen in 2021. Clearly, all of the economic fundamentals were there to support strengthening property prices throughout 2021. At the end of last year, we were sitting there with, you know, 20%, 30% growth in most places. What was probably relatively unusual was the uniformity

of that growth across every capital city. which I'm not too sure, I don't think it's probably happened before because as we always talk about, there are markets within markets but also, you know, cities doing different things at the same time. So whilst, you know, in our report for 2021, there had been forecasts of, look, hold on to your hats here, people, they probably didn't realise, well, none of us did, I think, about some of that price growth that will occur.

Yeah, yeah, well, it certainly read it pretty well I think the compressed spring probably bounced out a lot further than all of us predicted, actually. But sort of moving forward to this year then, Nicola, what are the overall takeaways on how property is likely to perform in 2022 from this year's report? I think probably there's a bit of divergence in forecasting this year, but that's actually mainly about location-specific differences.

So we already, at the end of 2021, we were starting to see some moderation in the Sydney and Melbourne markets already. So that was already happening at the tail end of last year. It certainly seems there is a consensus that the more affordable property markets are likely to continue to record strong conditions this year. Part of that is the fact that they are more affordable. However, some of these locations as well, you know,

I wouldn't say have been left behind, but you're talking about, you know, Brisbane, for example, is the number one takeaway. Everyone's saying that Brisbane, South East Corner is going to do massive things this year, whereas Sydney is already quieting down, but there's certainly not much indication that that's happening in Brisbane. Locations like Adelaide, for example, which again, very affordable.

In regards to Queensland and South East Corner, already seeing those record numbers in state migration coming into the Sunshine State, which was actually happening before the pandemic. But prior to COVID-19 landing on their shores, you know, the Queensland, well, I don't like to say the Queensland property sector, but say if we talk about the south-east corner, was purely underwhelming for a long time for a bunch

of reasons too lengthy to go into here. But certainly we are starting to, the number of commentators, the number of forecasts around Sydney and Melbourne probably being quite flat and the more affordable capital cities continuing that strong growth, maybe not the same sort boom conditions as we had last year and certainly looking at those um those major regional areas with an easy commute of a capital city they are certainly looking like they will continue to record pretty robust conditions yeah excellent uh exciting time so what are some of the common

key drivers that your industry experts have identified that we should be watching out for that are likely to influence properties direction in the year ahead yeah i mean obviously as i mentioned just then interstate migration is a big one um there is uh some talk obviously of interest rates we must keep in mind though that interest rates were at record lows before covid hit they actually haven't actually dropped that much and you know if you look at historical averages and things like that they do play a role of course cheap access to credit um apra is starting to bang the drum a little bit hopefully they won't bang that drum as they did in 2017 and reduce lending to such a degree that now we have, unfortunately,

these critically unsupported rental markets pretty much around the country. So that's going to be major factors. But I think, you know, 2022 year of affordability maybe or what this class is affordable in 2022, interstate migration, not just interstate migration but also overseas migration, already starting to talk about, you know, hundreds of thousands of new Aussies coming our way eventually and restarting, I guess,

that program that's been around for a long time, but maybe an element of catch-up is now as well underway because, you know, we haven't had any sort of overseas migration for the last couple of years. So all of those things, I mean, I wouldn't like to say what we might be looking at, but I certainly think in those markets that are going to be performing well this year, there should be double-digit growth as well,

and what we probably will start to see in some markets The price difference between units and houses has become so great now that that's often the barometer of when the unit market starts to shift to the positive. And, you know, some unit markets have been the doldrums for a while, so they actually might start to see some growth in those areas as well. Very interesting.

Well, time will tell. It's always interesting trying to read the tea leaves. But I really want to thank you for that really great overview your introduction Nicola and thanks again for your time on the show today. Thank you and have a good year. Thanks Nicola. Well it looks like we're in for another very interesting year in property so if you want to make fully informed decisions on what's likely to happen where grab yourself a copy of the interestee leaders predictions in the 2022 BMM property market forecast report which you can find on our home page at realty.com.au and stay with us to enjoy individual

property predictions from the BMM Reports expert contributors in this special dedicated show here on Realty Talk. Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by KnowHow Property. More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk, and stress while increasing your capacity for growth. KnowHow has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less, and live your legacy. Want to know how to invest in your freedom, visit knowhowproperty.com.au. Hi, and welcome back. Now, to give us a national

overview of the recent past and upcoming future for property, we're now joined by one of Australia's leading experts in property money management, Ben Kingsley, the founding director of Empower Wealth and the chair of the Property Investors Council of Australia, or PICA. So welcome back to Realty Talk, Ben. Thanks, Bushy. Thanks for having me. Now, Ben, last year, you very rightly predicted had a very promising year for property with a lack of supply being the biggest challenge and investors set to return to markets with sub $500,000 properties in second tier city locations being a hot demand, which has all proved to be right on the money. So how do you feel property performed against your predicted view? And most importantly, mate, what varied and why?

Well, I think, you know, having been through several cycles in the past, once we knew the job security was going to be there, then obviously cheap money also means you're going to see, you know, asset appreciation, whether it be property or other types of asset classes. You then factor in the sort of human movement that would occur during the pandemic and what we saw in terms of people looking at secondary locations and you place your bets accordingly. So I think from that point of view, we did see the rising tide lifting all ships across Australia and even more so in the sort of regional centres as people were looking for sea changes and green changes on the back of you know lockdowns and and the like so yeah it has

been obviously a very very prosperous time for those in the property market in 2021 and you know if you got in early enough you you're enjoying the spoils yeah spot on well turning to the future then and and what's in store for next year what's your overall view about how markets are likely to perform in 2022? Yeah, I mean, it's always hard in terms of taking a macro view across all of Australia. But I mean, that's what we did. So we saw system growth pretty much right through all property markets last year. I think 2022 will start to then see markets within markets coming into play. We definitely are seeing greater supply coming into the sort of Sydney and Melbourne market. So they'll probably, their growth will slow down. The fundamentals still look pretty

strong, subject to any further health developments and pandemic developments. That's the X factor that obviously, you know, we all put our caveats around at the moment. But I also see some markets that are probably overs in terms of where I see their fair value. One particular market for me of interest is Hobart, you know, having the, you know, finishing the end of 2021 with the fourth highest median house price in the country for the capital cities, it doesn't quite resonate with me. And I know that there's a fair bit of supply that's coming, going to come into that market. And from a population centre, it's not a very, very big city. I think it sort of sits between 13 and 15 in terms of major population centres. So that's probably the one that I'd

be interested to watch over the next 24 months to see whether it did get ahead of itself and there is a price correction there. And if that doesn't happen, then I actually see other markets around the country having some pretty, you know, fair times. But I think, you know, Perth is probably one of those markets where income, you know, ratios to affordability is still very reasonable. You know, you can still buy properties sub 500, you know, within a commutable distance to the capital city so so that's a market to to potentially see whether we we see a continued rebound in that market and you know i think you know brisbane's also white hot at the moment so and that southeast queensland area so i think that market's probably got a bit to

to run out of and and look that's on the back of sydney you know continuing to be our our wealthest wealthiest center in the country um so that's that's probably going to have a little bit more of a slowdown. I'm not sure it'll go negative. There'll probably need to be something like a rate rise that will trigger, you know, basically the full momentum coming out of that particular market. But that's, you know, the big caveats for me is definitely around interest rates and then sort of what happens in regards to new variants that we see from the COVID pandemic. yeah okay well touching on those variants and key drivers then ben which which ones do you think we need to watch out for in addition to what you've just mentioned that are likely to influence

property this year yeah so definitely the economic recovery so broadly let's take a macro view so we you know what we've obviously had a poor september quarter which is probably going to be followed by a very strong december quarter so retail spending household consumption they are going to be a real key driver as we get more mobile. And I suspect also, you know, the money that would normally flow offshore, the $70 billion that we would spend on international travel will probably still find its way in the domestic economy. So that's a real positive on the upside. In terms of interest rates, we just mentioned that housing supply and, you know, the supply side is going to hopefully be a good story, but that's going to be coupled with the immigration story. So that's why I'm

still thinking on balance it's not a bad property market uh for 2022 um but it might take a breather in some particular markets i just don't see this you know system growth that's going to be absolutely everywhere as really affordability does start to bite in some particular markets yeah okay and the old media has a big influence ben with they either love it uh yes pushing it high or low what's your thoughts around the sentiment that they may drive next year yeah Yeah, look, you know, that doesn't, you know, a boring property market where there's no real change doesn't sell clicks or doesn't, you know, get eyeballs. So there's no doubt that the media will play a role in terms of the discussions that they have. And that obviously affects sentiment.

So, yeah, we can't underestimate the power of the mainstream media in regards to property boom or property bust. But we have seen, you know, like shows like 60 Minutes, 7.30 programs where there's a lot of negative sentiment that has been portrayed over the last two or three years and yet the property market continues to buck the trend. You know, we only turn over around 5% of stock each year. So we just need, you know, tension on each of those properties to see values increasing.

And if money stays pretty cheap, that's why I still think we'll probably finish the year on a positive note, but just not at the sort of the no speed levels that we're getting at the moment in terms of, you know, the speed of growth that we saw in 2021. Yeah, no, awesome. Well, looking at the sector level, man, what are some of the important sectors that you think we need to watch out for in 2022?

So when we're talking about, you know, regional markets, we've got to be mindful of whether this is a sustained transformation that we're seeing in regards to future growth. and I'm probably not just thinking of 2022, I'm thinking 23, 24, you know, these markets are usually more cyclical. They also have an ageing population in them as well. And, you know, there's a lot of baby boomers in those particular locations. So if we are talking about, you know, those people remaining there until they pass, what does happen to supply and where's the appetite for the next generation of people to move through? And I think that's going to come down to,

you know work requirements and and what the businesses ask of their of their employees so right now there's very much this hybrid model that we're seeing play out but my question is you know and you know from the biology point of view humans are very much social creatures so um you know that that question around the younger generation what will they do in terms of staying in the bigger cities and and they're the ones who are going to lead that next generation of wealth creation so you know will that support the inner city areas maybe you know that's my read on that over the medium term is that that will be the case what happens in 2022 in our bigger cities will probably be a bit of a breather for our major centres but some of those centres who didn't perform as well

moving a bit higher. Yeah okay and what are some of the surprising elements that you're seeing that may have a lasting impact on property this year Ben? Yeah I think that the big really comes down to whatever market manipulation occurs through intervention. So APRA released a paper only a week or so ago about the requirements of the banks to be more secure when it comes to investment lending. That's obviously going to put prices in play for higher interest loans for investors. I'm not thrilled about that. I'm on the record of saying that. They're lower risk in my view. And that's what history tells us also, that more owner-occupied loans default than investor loans. Look, I can understand their concern around making sure that the market is

stable and the lending markets are stable because that has a greater ramifications for the broader economy. But they're the ones that ultimately are going to play out. It's going to be harder for investors to make a play. And I think the governments and the regulators are signalling that you know we can't have everyone in Australia being property investors I don't disagree with that you know if we if that sort of measure sits around 30 to 35 percent of the population choosing property as an investment vehicle to provide for financial retirement benefits for their families I think that sits about right we don't want speculation in the property market we always say it's a long-term play and also you know for those people migrating to this country

it also gives them opportunity for mobility and movement by providing that rental stock and also for young people you know finding their way or families moving until they settle down in different locations so that's probably going to be the one that that sort of sits at me in terms of government intervention going forward is probably an element of risk that all property investors should be aware of yeah very good call mate and really appreciate you taking time out of your very busy schedule to give us that national overview ben and thanks for your time on the show today Absolute pleasure, Bushy. Thanks for having me.

Thanks, Ben. Well, it's clear that the tapering and receding tide isn't likely to float all ships in the year ahead as supply increases and demand is curbed by potential lender restrictions. So another year to be very careful with your asset selection, as always. And if you want to join a safe circle

of like-minded investors creating a national voice for property investors, join us as a member with Picker at www.pica.acn.au. More to come. here on Realty Talk. Property deductions can save you thousands of dollars each year. To make sure you maximise deductions,

you need to work with the most experienced quantity surveyor in the country. BMT Tax Depreciation is the leading specialist in the industry. They've completed over 700,000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote.

Greetings and welcome. Now, whenever you want to find out a current snapshot of what stage of the growth cycle different locations around the country are at, one of the best places to start is Heron Tobwhite's National Property Clock Report, because it's always got its finger on the pulse of property. So to share HCW's review of the year that was and the year that will be, we're joined by Kevin Brogan, Heron Todd White's Director of Group Risk and Compliance. So welcome back to Realty Talk, Kevin. Hi, Bushy. Thanks very much for inviting me. Great to see you again. Now,

Kevin, last year you predicted that fringe and lifestyle residential markets were likely to see significant market activity and strong price growth. So how do you feel property actually performed against your predictions last year and what varied, if anything, and why? Yeah, look, I think I appreciate you drawing attention to the thing that I got right. I think uh there and and that was very much the um uh you know the sort of transition of people's um view of what they wanted out of a property slightly larger properties a bit more space around them um you know heading out into the fringes and regions that sort of um activity very much in evidence um during the course of 2021 um and you know the the fact that uh

the demand was coming from very large population centres into fringy regional areas where there was a limited supply, actually had a very strong impact on prices. So, you know, from that point of view, I'm always nervous looking backwards at predictions, but, I mean, it looks as if that pretty much came about the way that we expected. But I know you're not going to let me get away

without mentioning something which I predicted, which didn't quite pan out um and that that was that um historically when government uh incentives have been offered it actually draws um demand forwards so if you're looking at building a house you know for for many people building a house might be something they do maybe once or possibly twice um so it's it's not like you're creating extra demand you're actually drawing that demand forwards and typically if you look back at the first time homeowner grant after um the gfc you actually brought forward demand and there was a bit of a demand vacuum that sat behind that once that demand had been realized um and i did predict a similar uh situation for 2021

um but perhaps some of the other points that i raised uh about the the strength of demand and the low interest rates being the predominant driver those those things were very forceful in the market and if I'm honest probably predictably so and and that really sustained demand throughout the entire period of last year so you know there there was no demand vacuum that was apparent the demand continued right the way through to the end of the year Yeah, no, spot on. So let's turn to the future now then, Kevin, and get your overall view about how property makers

are likely to perform in the year ahead. Yeah, well, I mean, just to pick up on what I was saying about the interest rates, you know, even if there is an adjustment upwards in interest rates, and let's be honest, it can only go one way from where we are at the moment, we will still be in a historically low interest rate environment. so you know that that will continue to be a driver through 2022 and that will underpin the

the demand there'll be some mitigating factors and we've already seen those in the in the closing period of 2021 you know where where you've got more property coming onto the market As we entered into summer, we saw a bit more supply coming on. Now, that didn't soften the market a great deal, but it reduced the rate of price increase in some markets where there was additional supply. And I think that's probably going to sort of continue as a mitigation. Of course, the big unknown will be the sort of continued impact

of COVID and new variants. Those, you know, those are the things that we're going to need to react to. And, you know, that could also act as a sort of mitigant to growth. But generally, looking at the sort of global economy, I mean, there seems to be improvements, you know, in world trade. Hopefully some of the supply chain issues that have been causing problems will resolve for themselves. I think there's certainly reason for optimism through certainly the first half of 2022, even perhaps if the market's probably not quite so hot as it was in the final quarter of 2021.

Yeah, no, good call. You've touched on some of these already, but are there any other key drivers that we should watch out for that are likely to influence the property market's direction as you see it? um yeah look i think there's there's a component of the of the property market just to touch back on the um the um construction side and and that is i think you know we we may get some of the supply chain issues uh resolved but probably not quickly um and certainly we we've seen that sort of continued pressure on construction prices um and the costs that are being borne by builders

It's not easy being a builder at the moment. They've signed up lots of people to build houses, a lot of them on fixed-price contracts, and yet the costs continue to escalate. So I think that's going to have an impact on new constructions and, you know, the thing to look out for is the risk because, as I said, it's not easy being a builder in those sort of environments.

Yeah, good call. apart from the construction side of the equation are there other important sectors that we should be watching out for in the year ahead yeah i noticed something last last year i sort of commented on um logistics i think still um you know getting away from housing logistics is still going to be a sort of key focus area um and i think i also sort of predicted um you know in the infrastructure uh realm you know lots of infrastructure projects um that have been initiated again probably low interest environment making those really um attractive um and that gives us the best possible um you know sort of springboard for future economic growth so

i think the continuation of those um infrastructure projects uh is something that we'll see right the way through 2022 as well yeah okay and are there any sort of wild card or surprising elements that that you're seeing that may have a lasting impact on property this year? Look, I think what will be really interesting is to see how we continue to go with the fringe markets. So, you know, it happened all through 2021 that people did move into the fringe markets.

I think some of the regional markets, which traditionally were really quite seasonal because they were sort of holiday, home away from home destinations, you know I think they're probably going to be more sort of all year round destinations so I think you might see you know some of these traditionally holiday areas actually becoming you know really quite busy markets all the way through the year and it'd be interesting to see how that sort of pans out I think working from home as you can see is going to continue you know for a while but it's probably going to be a component of our working lives rather than

being the norm and so as people perhaps are expected to be in the office sort of more as we go through 2022 maybe that will soften demand in some of the fringe areas as people find they actually have to commute three times a week instead of once a week so be interesting to see how that uh that sort of works out yeah there's some very mixed views on the the sort of the shift to the regions and how sustainable that's going to be so it will be very interesting to see how that pans out in the year ahead but kevin i really want to thank you for more great predictions again this year and thanks again for your time on the show today well thanks very much pleasure yeah great kevin well it's clear from htw's forecast that economic recovery is likely

to firm this year with, and you'll have to read the report to get the details on this, but Kevin refers to Vespers, which are virus escapees seeking provisional Australia, and they're likely to make a lasting mark on property markets. And if you want to grab yourself a full copy of HCW's forecast, along with a host of other property leaders' predictions on what's likely to happen with property right across the country this year, grab yourself a full copy of the 2022 BMM Property Market Forecast Report that you'll find on our homepage at realty.com.au. Stay with us for more here on Realty Talk, your go-to place for all things property. Successful property investment is a game of finance. Do you have the right team and the

right game plan? Realty Talk is brought to you by KnowHow Property. More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk and stress while increasing your capacity for growth. KnowHow has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au. Now, welcome back to Realty Talk. Well, property movement has been quite variable across the east coast of Australia over the last year. So to get a firsthand view from the trenches on what's happened and what's likely to happen with property on the S&C board,

along with other parts of the country, we're joined by Rich Harvey, a leading buyers agent, an economist, a property investor, and the CEO of Property Buyer. So welcome to the show, Rich. Great to be on the show, Bushy. Looking forward to it, mate. Now, before we sort of delve into the future, Rich, last year you predicted that Sydney was set for quite a stellar year with cashed up expats leaving the market charge. So how did property perform against your predictions for last year and what varied of anything from your outlook and most importantly, why?

Yeah, look, well, certainly expats were flavour of the month. There was talk of up to 400,000 expats overseas trying to get in, but obviously a lot of them couldn't get back. They were literally stuck overseas because the borders closed and they couldn't get back for whatever reason. But there were a significant number of expats that came home and they were very much a dominant force in the market because they were earning Singaporean or Hong Kong or US dollars and obviously exchange rates in their favour. So that worked out very much as one factor. And in some ways, they kind of replaced the overseas buyers that had been absent from our market so um yeah i did i think i correctly predicted that i did say sort of last

year beginning of january i think i said the market might rise around 10 while i was about 15 off the pace it actually raised 25 in sydney my goodness um but i mean it was just such incredible pent-up demand so that was something you know i think what surprised us all last year was just that people were spending so much time at home that they got really sick of their digs. And they went, I just don't have a home office. I've got the kids at me. I've got the dog scratching here.

I've got, you know, my partner, noisy. He's trying to talk in the other. I need a bigger house. And so everyone wants one or two home offices now as part of their setup. And so everyone's looking to upgrade. And there was more money washing around through stimulus packages.

So I think money was cheap. Credit was very cheap. record low interest rates. So all of those factors combined, we had an incredible year in real estate. No question. Absolute perfect storm. So putting on our future glasses now, what's your overall view for what's about to happen with markets and its performance in 2022? Yeah, well, I'm definitely going to see the market moderate. There's already a lot of chatter, you know, last year in December and obviously now in January about, you know, particularly when interest rates will rise now my view is that interest rates won't rise in 2022 unless we get

sudden wages growth or you know a rapid rise in inflation above well above the three percent mark so my view for 2022 for if you want to talk about generically because there's no one property market remember that is that no we're going to see the boom moderate we're going to see positive growth in most capital cities next year but i've got some numbers here i'll share with you across each of the cities but definitely slower growth we're definitely past the peak rate of growth um in terms of where i see the market going i'm predicting sydney to go six percent melbourne seven percent brisbane i've said 10 i'm being possibly a bit conservative i think it might go more than 10 could be 10 to 13 um adelaide and canva seven percent perth three percent darwin six and hobart

seven and again like i say they're very generic numbers that i've just quoted they're bushy so But I'm not predicting a 10% drop in the market like CBA is predicting in 2023. You know, we may get some pullback once interest rates start to rise, but definitely we're going to see the markets slowing and it'll be more of a buyer's market next year as you start to see listings start to hit the market in greater volumes.

Yeah, those numbers you've just mentioned, which sound more like an average year, if we look at the sort of average growth, with the exception of Brisbane, which sounds like it might be the outperformer amongst those that you're looking at. Mate, what are the key drivers that you think we need to look out for that are likely to influence the direction in the year ahead?

Well, Bushy, I think there's three key things to look out for. Number one is just markets or consumer sentiment, how people are feeling about the economy, feeling about their jobs and whether they're willing to buy a property next year. So that overall sentiment will have a huge impact on how people behave in the property market. But the other two factors is simply the price of credit, i.e. interest rates, and the availability of credit.

So if APRA jump in and really crimp investor lending like they did back in 2016-17, it's going to dramatically impact the market. And we saw in 2021 they increased the serviceability floor by 0.5%. Now, that basically reduced people's borrowing capacity by 5%. but if they step in and really hammer investors my goodness that's going to have a huge impact on the market so the thing i'm saying you've got to watch out for is if that happens we're going to have a rental crisis i think we're going to have a rental crisis anyway but it's just going to exacerbate it right yeah um and wishy the other thing looking ahead to next year is is the once

the borders are fully reopened and we really start to see a flow of students and migrants and skilled workers coming in there's potentially 200 000 more people that will enter our shores in the next at 12 to 18 months. Now, they all need a rental property. They need a roof over their heads. So I think that that's going to be another big factor is just the rate and the speed of migration coming into our country. Yeah, good call.

It's almost going to cause a potential second wave because there's that sort of delayed effect between the immediate rental demand and then the flow on housing demand. So all pretty strong demand indicators. Sort of shifting to the sector side of the equation, And are there any sort of important sectors that we need to watch out for in the year ahead then, Rich? Yeah, well, I think the premium property market has always been quite resilient. You know, I call it about the A-grade.

So we're talking like in Sydney, the eastern suburbs, the northern beaches, lower North Shore. You know, in Melbourne, you're talking Toorak, South Yarra, you know, all of those beautiful, some of those bayside suburbs, Bomaris. um you know i think those markets are going to perform very very well because you've got a lot of businesses that have done extremely well during covid um it's obviously the poor hospitality and tourism businesses hairdressers cafes that got smashed last year um but they're not necessarily buying million dollar matches in turac right so it's the prestige market will continue to shine and i bet you a lot of overseas buyers will be coming to our shores because we have a beautiful clean environment great beaches great economy so you know we are going to be seeing that market

you know pretty much a very strong demand i think um you know the traditional market of mum and dad that sort of one to three million dollar range i think you'll continue to see covid trends happen there with people wanting to upgrade that have been frustrated or didn't have the finance and there'll be a lot of trade going on in that segment um first home buyers again it's going to depend on what's happens with interest rates as to whether they're active or inactive in the market but i definitely think the bank of mom and dad is going to have a pretty um a pretty active attendance next year in a lot of auctions um helping kids get into the market and um you know i'm encouraging my boys to get into the market and so for a deposit because you know

people could say have i have i missed the boat you know and i'm saying no you haven't missed the boat you've got to get on the boat you know that's one of my catchphrases get on the boat you know just if you can't get on at this port get on at the next port yes the prices have gone up But it's going to keep going up, not forever, but, you know, you'll have some bumps along the way. But get on the boat so you can actually enjoy the capital growth wave ride, you know, at some point. And I think the last sector I would talk about is just investors, Bushy.

I think investors, while interest rates are low, while you really can't get money, make money from a lot of other sectors, they'll be definitely attracted, particularly as we start to see rents rise. And I'm predicting that rents will rise about 5% per annum over the next five years. So potentially a 25% rise in rental returns or more because we're just not building enough properties to satisfy demand. Yeah, very interesting times.

Are there any sort of other wild card or surprising elements that you're keeping your eye on that may have a lasting impact on the market in the months ahead? Yeah, I think one of the trends that COVID has brought about is what I call the flight to lifestyle. So, you know, people fleeing the cities and chasing the Byron Bays, the Mornington Peninsulas, the Central Coast, wherever, the Sunshine Coast, they're really going to those beautiful coastal or tree change areas, you know, perhaps it's the Blue Mountains or Orange or wherever, getting out of the city where they don't need to live in the city to do their job and raise their family. So that trend, I think, will continue. It won't continue at the same rate, but I definitely think we're going to see that flight to lifestyle continue as people are really chasing the best of both worlds, working from home, having a more affordable property in an area they love, potentially without as much traffic. But I've got to tell you, every time I go to the Gold Coast, the M1's a car park, right? And if you go to Byron Bay, you're going to be there with a thousand million other people. So some of these lifestyle areas are being a bit overloved.

So that's an interesting phenomenon that we're going to see continue. Yeah, I love it. And I think you've summed it up really well with that flight to lifestyle. I think that's really captured exactly what's happening right around the country at the moment. So, look, I really thank you for those hands-on projections, Rich, and thanks again for your time on the show today. My pleasure.

Happy to help. Thanks, Rich. Well, it appears that the upward price pressure is expected to continue with the flight to lifestyle long-lasting impact from the pandemic. and if you want to grab yourself a full copy of rich's forecast along with other interest leaders predictions on what's likely to happen with property right across the country this year so that you can make better informed decisions grab yourself a copy of the bricks and

mortar media 2022 property market forecast report which you can get on our home page at realty.com.au you're watching realty talk your trusted voice for all things property welcome back well i hope you've enjoyed part one of our deep dive into this year's 2022 bmm property market forecast report before we wrap things up let me quickly summarize some key takeaways on this year's predictions from today's industry leaders it appears that the rising tide will no longer float all property ships in the year ahead with a return to more normal market conditions with some locations to outperform and a-class properties likely to hold firm on the back of firming economic recovery and Vespers making their mark. Despite some

pessimistic outlooks from bank economists, upward price pressure is expected to continue with the flight to lifestyle likely to have a long-lasting impact. So it's clear that if you're a real estate professional or a serious residential investor looking to make smart decisions in the year ahead, you can't afford to miss all of the details from today's guests and other industry leaders in bricks and mortar media's 2022 bmm property market forecast report that you can find now on our home page at realty.com.au and that brings us to the end of this week's show another big thanks to our special guests nicola mcdougall ben kingsley kevin brogan and rich harvey for sharing their property predictions and to make sure you don't miss an episode of australia's

longest running and most popular online property show, subscribe to Realty Talk Now on Apple Podcasts, Google Podcasts, Spotify, YouTube, or wherever you listen. And make sure you sign up on the realty.com.au homepage to get every episode in your inbox every week. And while you're there, make sure you check out one of Australia's most extensive range of properties for sale from over 7,000 agents nationally. Thanks again to realty.com.au and BMT Tax Depreciation for their ongoing support. I'm Bushy Martin from KnowHow Property Finance. I look forward to joining you again next week for part two of BMM's Industry Leaders Property Predictions that confirms what's promising to be another very exciting year ahead.

So I look forward to seeing you then. to get a summary of all this investment gold in the show notes just email me on hello at khgroup.com.au that's h-e-l-l-o at khgroup.com.au or check us out at www.bushymartin.com.au forward slash get invested i look forward to joining you next week for another episode of the Get Invested podcast. So thanks for listening. And as always, dream as if you live forever and live as if you die tomorrow.