New Intentions

Investing in residential real estate in 2022? Here's what to expect.

So, you’re looking to partake in one of the hottest real estate markets Australia has seen in years. The combination of low interest rates, bustling demand, and asset scarcity has boosted property prices by 22.1 per cent over 2021, and more value growth is on its way for 2022.

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Residential real estate is at the top of the menu for most investors in Australia, with its total dwelling value across the country just shy of $10 trillion as at December 2021.

Looking to participate? Whether investing on your own or considering investing alongside a residential property trust, this is an exciting journey for you to be on. Here’s what to expect in 2022.

More investors looking to the west

WA has whet the appetites of many interstate investors, as the mining state remains one of the most affordable residential markets in the country.

Recent data from REIWA (Real Estate Institute of West Australia) shows the median price for WA houses hit $520,000 in December 2021, with a 0.4-per cent rise for the month and a 13.1-per cent increase in dwelling values over the 2021 calendar year.

Compare this to Sydney’s median price of $1,374,970 and Melbourne’s median of $953,000, and it’s no wonder investors are looking to Perth.

According to REIWA president Damian Collins, WA is still the most affordable state in Australia. And despite the incredible gains of 2021, Perth property prices remain 3.4 per cent (or roughly $18,000) below their 2014 peak.

Beyond just affordability, many believe WA property prices have yet to hit the ceiling. The state has had strict border controls since the pandemic began, but the walls are set to lift in February 2022. The large reopening of the region means more foot traffic will be allowed to return, bringing with it vast sums of capital to invest.

Interest rates are at historical lows and many are trying to get into the market prior to a rise. Those investors with an eye on the horizon may be thinking that once an interest rate rise does occur, leveraging against a more modestly priced residential asset will work in their favour. Where better to find affordable assets, with a significant value proposition for investors, than in the west?

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The government to unlock major supply constraints

The Property Council of Australia (PCA), the country’s leading real estate body, has submitted a proposal to the Australian Federal Government to come up with bilateral agreements with state governments to resolve major supply issues in their respective regions.

The PCA points out that the lack of residential property affordability is owed to the significant restriction of supply across the country. Whether removing the complexity of subdivisions and splitting land parcels in Sydney or allowing for development on precincts with restricting zoning, the hope is for the Australian Government to supercharge land supply and thus increase the affordability of housing for Australians.

Expect further growth

2021 saw huge property price growth in each state, with only Melbourne showing a decline in the final month of 2021. We’re of the opinion this growth, while unlikely to reach the heights of 2021’s mammoth year, will continue into 2022.

Demand will continue to flex its muscle, especially as restrictions loosen and investors are freely able to travel interstate to view prospective property investments. And supply, while the government has an agenda to resolve its constraints, is unlikely to significantly increase to meet demand.

2023 may see some return to pricing normality, but before then there is only one way for Australian dwelling values to go, and that is north.

New Years Resolutions may seem tacky. But knowing the right time for you to make a serious investment in residential real estate is a sound strategy. If you think 2022 is the right year for you to invest in residential property, we’d love to help.

To discover how investing alongside us in high-quality residential assets could secure you a robust retirement and wealthy future, book a meeting with Guy Doggett (Director, Investor Relations) below. 

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– Guy

Who we are

Properties & Pathways is a dynamic property investment firm. We handpick our properties throughout Australia to reduce risk and protect investor return. The strategy works. Our completed syndicates have provided investors an average annualised return of 25.91%.

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*Past performance is not indicative of future returns. Any information provided on this website has not considered the objectives, financial situation or needs of any investor; investors should consider whether it is appropriate to them to partake in a commercial property investment prior to investing, in light of their objectives, financial situation or needs. Every investor should obtain and consider the investment’s Information Memorandum before making a decision in relation to the investment.