2022 Market Update

The property market on the Northern Beaches has just come through a massive price BOOM and now the question is:

What does the future hold for the local property market?


Following a two-year period of unprecedented growth (29-40% depending on your postcode and property type), October 2021 showed the first signs of a turning market. Buyer behaviour had started to shift. There were not quite as many frenzied buyers gripped by FOMO in the market which was starting to affect Auction clearance and results. 

Buyers that had seen median house prices rise as fast as $1,200 a day and auctions routinely finish hundreds of thousands of dollars over their reserve, were understandably fatigued and starting to think about spending their money on things other than property i.e. that holiday they hadn’t taken over the past two years!

In addition to this, chatter had started about a shift in interest rates coming sooner than the RBA had indicated. The RBA had repeatedly noted in their monthly press release that their plan to change the cash rate was likely to late 2023/early 2024. However, other financial analysists were suggesting that rising inflation pressures would see the RBA start rising rates in the second half of 2022, possibly even earlier.

They were right. The RBA increased the cash rate by 25 basis point in May 2022, followed by 50 basis points in June and another 50 basis points in July. Announcing the third rate increase in as many months, RBA governor Philip Lowe said the size and timing of future increases would be guided by incoming economic data and the board’s assessment of the outlook for inflation and the labour market.

What effect has this had on the market?

In our 25+year experience, if there is there is one thing that it is sure to slow the property market down, it is an upward trend on interest rates. As rates increase, buyers borrowing capacity decreases, leading to a decline in the price able to be paid. It is important to say here that this doesn’t mean the market stops. It means that the rate of growth is slowing and it needed to. Prices on the Northern Beaches right now are estimated to be back to May 2021 price levels, which means a price pullback of approximately 12-15% from their peak. This pullback only really creates a potential price issue for those people that have bought within the past year and now need to sell.

What does the future hold?

Depending on who you speak to, the widespread belief is that cash rate is expected to peak in early 2023. Meaning, there is a bit more pain on the interest rate front before they stabilise as the RBA looks to bring inflation within their target range. The estimated peak in the cash rate (2-2.5%+) is likely to translate to bank interest rates between 1.5-2% higher than where they are now.

A shifting market also creates opportunities.

We are seeing more first home buyers enter the market, supported by Government incentives and the changes to Stamp Duty. First home buyers are also appreciating the opportunity, for the first time in two years, to take a bit more time in making a decision to purchase without the FOMO. Investors are also stepping back into the market as they take advantage of the fall in prices and the strength of the rental market. In our opinion it is also a great market within which to upgrade as the price gap between properties is likely to not be as great as in a boom market.