Research Briefing | Apr 28, 2022

Australia’s cooling property market no immediate threat to new housing

Australian Population RB

Residential real estate markets globally performed strongly over 2020 and 2021 and Australia was no exception. Low borrowing costs, grant incentives, pandemic driven housing preference shifts, elevated savings and amassed household wealth underpinned the strong property price growth recorded over the last two years. The national weighted median house price rose 20% in 2021 to $1.04 million, whilst the unit median grew by a more modest but still strong 10% to $688,000.

What you will learn:

  • Australia’s residential housing market ran red-hot through 2020 and 2021. The national median
    price of total dwellings (weighted eight capital city average) grew 25% over the pandemic to
    $906,200 in Q4 2021.
  • The pace of growth has been slowing however, with Q1 2022 estimated to have risen a modest 1.6% q/q. Most signals point to the housing market reaching a turning point. Triggered by the tightening of credit availability that started late 2021, we expect a correction in national dwelling prices to begin before year’s end.
  • Further fixed rate rises are expected given the active ramp up in external borrowing costs for banks. The Australian Prudential Regulatory Authority is anticipated to enact additional macroprudential tweaks in coming months, but most importantly, we expect the RBA begins hiking the cash rate from mid-2022.

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