Just when you thought 2020 was going to take the cake, 2021 came along and added a cherry on top.

Before we sink our teeth into 2022, it’s time to take out the crystal ball and make five fearless predictions for the coming year.

Units make a comeback

While unit prices increased 14.2% nationally in 2021, house prices increased 24.6%. The pressures which caused this two speed growth include a pause on international arrivals and foreign students and the working from home revolution allowing people to dream of more space further away from their place of employment.

However, with our society opening up, the appeal of a lifestyle closer to the city will lure people back into apartment living. There’s already a trend for offices to wind back work from home policies which means the appeal of minimising daily commute times by working closer to the office will increase the attractiveness of units. We’re already seeing this with rents rising for inner-city apartments.

There’s also pressure on affordability for housing, meaning that the relative price difference will see people look to units as a viable alternative.

With international students and foreign nationals making their way back to our cities, the demand for apartments should increase. Foreign nationals made up a record low share of property purchases with only 2% of sales in 2021. The preferred property class for this cohort is apartments.

Lifestyle locations remain popular

In December 2021, house prices for the regions increased 2.2%, up from 1.87% in October. While growth is tapering off in Sydney and Melbourne, the pace of growth in the regions continues to increase even on the back of a 25.2% increase in 2021.

The forces fuelling this growth are people reprioritising their relationship with their place of employment with the ability to work remotely and years of lockdowns giving people an appetite to have more space. It doesn’t seem like this trend is slowing. While many have already made the move, the seismic shift required to uproot a family can take years to plan and execute and we will see people making the move through 2022.

RBA unlikely to raise interest rates

If you were to have asked six months ago, we’d have said that the RBA would definitely not be raising rates in 2022, however we’ve downgraded this outlook to ‘unlikely’. Lenders have already priced in several interest rate rises over the next few years as is reflected by fixed rate increases across the board. Many economists believe that rate raises are coming sooner rather than later, however the RBA has consistently said they won’t be raising rates in 2022 and that’s straight from the horse’s mouth. The caveat is inflation, which is stubbornly high as supply chains struggle to deal with both a pandemic disrupted trading environment and the demand from the economic recovery happening around the globe. If inflation kicks into another gear, the RBA will have no choice but to raise rates. However, interest rates need to be kept in perspective, even if rates rise, we are still in a historically low interest rate environment and we will be for the foreseeable future.

Update January 31: What a difference a month can make. After greater than expected inflation data coming in locally last week, and the US Fed signally a rise in March and a broader shift in their monetary policy, all eyes are on the RBA meeting on February 1st. Rates won’t rise for at least a few months, but the commentary will provide details of the RBA’s intentions. Will they release another statement firming their previous position that rates are unlikely to rise this year? It’s possible. The market is calling their bluff, with rate rises from August onwards being priced in.

Record year for breaking out of fixed rate terms

There’s many reasons to refinance, including accessing equity in a property for investment, renovation or debt consolidation. It’s rare that breaking out of a fixed loan has made sense in the past as the break costs can be very expensive. However with fixed rates rising, these break costs may be small or even free. Many will look to move to a new lender based on the valuations on offer to access equity in their property. Book in a chat to discuss your options.

The year the pandemic ends

Ok, this is may be part wish, part prediction. According to the World Health Organisation, global vaccination rates could push up to the 70% mark by mid-year and we should be moving from the pandemic to endemic phase of COVID-19. That means we enter into a new chapter of learning to live with the virus and life will return to a version of normal that will look familiar to us. As we enter year 3 of the pandemic, it feels overdue.