Why 2022 is the WORST time to buy property


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It’s a bold statement, but it’s true.

For some of you who are reading this right now, 2022 will absolutely be the worst possible time you could consider buying a property.

In fact for these people, moving forward with a real estate purchase this year would have the potential to cripple them financially, not just now but well into the future.

Sounds dramatic, right?

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And I’ll give you 9 reasons why this could be the worst time to buy property in a moment… but here’s the truth.

This statement rings true in 2022.

It was also true last year.

And the year before that.

And in 2015, 2010, 1985, 1972…

The reality of real estate is that…

There is no “best” time or “worst” time to buy property

Here’s why…

Property investment is a process, not just an event.

So rather than just talking about going out and buying a property in 2022, the right time for you to consider investing is when you have all your ducks in a row.

This means you have:

  • a strategic property plan, so you know where you’re heading and what you need to do to achieve your financial goals,
  • set up the right ownership structures to protect your assets and legally minimise your tax,
  • a robust finance strategy with a rainy day buffer in place to buy you time

Of course, for some 2022 will be a great year to invest, but in a moment I’ll explain why that will not be the case for others.

However, it’s likely that you’ve heard me talk about the drivers of property price growth over the years.

There are so many things that determine a property’s price performance and growth trajectory, many of which are well outside of your control, and some which also have nothing to do with the property itself.

These include, but are not limited to:

  1. The economy – the performance and state of the broader economy impacts people’s ability to buy and sell the property as well as …
  2. Consumer Confidence – when people feel comfortable about their financial situation and their future job prospects they are more likely to make big purchases like moving home or buying an investment property.
  3. Employment levels – if the community at large is experiencing high levels of unemployment, then fewer people can afford to pay a mortgage, which reduces demand for property
  4. Government policy – aspects to do with tax, depreciation, and homeownership grants will work to boost or reduce demand for property, particularly new property in recent years, which is where the federal government’s primary agenda has been.
  5. Population growth – or household formation to be more exact, as when more people move into an area this equals more demand for housing, whether it’s to buy or rent.
  6. Local Demographics – things like average incomes, average age, household structure, crime rates, and employment opportunities.
  7. Supply – The basic economic principle of supply and demand is a fundamental property market driver of price growth.
  8. Availability of credit – property investment is a game of finance with some houses thrown in the middle, but even owner-occupier demand is very much driven by the availability of finance and the cost of money, in other words, interest rates.

Now, as a result of these factors – which are by no means an exhaustive list, but they give you a general indication of some of the major influences on property prices – our property markets move through cycles, from booms to busts and back again.

Moving forward, property values should increase throughout 2022, but at a slower rate of growth than 2021.

One of the leading indicators I watch carefully is housing finance approvals, and these are still at very high levels suggesting that many Aussies are still looking at getting into property, meaning we will have continuing strong ongoing demand from owner-occupiers and investors as the year moves on.

Over the last year, the apartment market hasn’t grown as strongly as the housing market, but now with the differential in price between units and houses at the highest level on record, and houses becoming more unaffordable for many, I can see strong capital growth in family-friendly apartments in great neighbourhoods.

Even apartments in the CBD towers and accommodation around universities should pick up as immigrants and students return, however, these never really made good investments and I would steer clear of them.

And rents should also keep increasing as there is a desperate shortage of good rental accommodation.


And currently, it looks like we’ll have a combination of multiple growth drivers to give investors an opportunity to take advantage of the current strong phase of the property cycle.

Here are some of the indicators suggesting that 2022 will be another great year for property investors: –

  • Consumer confidence has been continually improving and more people than ever see this as a great time to invest in property or upgrade their homes.
  • COVID numbers are under control –  the results of our robust vaccination program is excellent,
  • Our economy is improving faster than many expected, and all indications are that will remain strong throughout the next few years.
  • Unemployment is falling as many new jobs are being created – in fact, most of the jobs lost due to Covid have been restored
  • Auction clearance rates were consistently strong in the last few months of 2021, not just in the two big auction capital of Melbourne and Sydney
  • More buyers and sellers are in the market and transaction numbers have increased considerably.
  • At the same time, the banks are keen to write new business – another positive for our housing markets.
  • Moving forward further jobs creation, consumer confidence and business confidence (leading to spending and employment) will underpin our housing markets.

So why could this be the worst time to invest for some people?

Please let me explain with an example…

Between 2016 and 2018, Sydney and Melbourne property values soared allowing those who owned properties in our two big capital cities to amass small fortunes along the way.

But it’s important to know that just because “Sydney boomed”, that doesn’t mean that ALL of Sydney’s housing boomed.

It means that overall, the majority of properties across the city experienced an increase in value.

However, there are always some areas, pockets, streets, and individual houses that perform better or worse than the average.

For example, the value of the apartments in many of the high-rise, Legoland towers around Sydney languished as concerns about structural integrity, following the Opal Towers debacle tarred all new apartments with the same brush.

Of course, the concerns raised by Covid19 only added to this.

Let me give you a different example.

Let’s say a couple owned a property in a sought-after Sydney suburb in 2017.

They had purchased in 12 months earlier for $1.55m.

Home PropertyIt’s right in the middle of a booming property market and sadly, the couple split up.

It’s a messy and contentious divorce, and both parties want to sell the home as quickly as possible so they can move on.

They also don’t want any looky-loo neighbours snooping through their home every weekend, and they don’t have the energy or appetite for a big, public marketing campaign.

So, they engage real estate to sell the home privately/off-market.

It reaches fewer potential buyers and drives less competition, but they secure a buyer within a week.

They sell the property for $1.6m in a hasty settlement and move on.

Had they taken the property to the open market – say, an auction – and a number of would-be buyers fell in love with the property, they could have sold for more money.

But their circumstances dictated a swift sale, so they accepted the price they got and moved on.

It could be the case that one street over, a couple owns very similar property.

AuctionThey are planning to move in with their parents for six months while they build their next property, so they have no deadline or timeline pressures and they’re happy to wait for the right buyer to come along.

They list their home for auction, pay for an expensive but very high-profile marketing campaign, and achieve a final sale price of $1.825m.

Two similar homes, two very different outcomes.

Neither is “right” or “wrong”, and this is the infuriating truth of real estate: there are no “definites.”

Just a series of educated guesses and informed choices, which – with the right expert guidance – can lead you towards making profitable decisions for your future.

When it comes to deciding the right time to buy or sell, at the end of the day, it’s our own personal situation as much as external factors that influence the best course of action we should take.

The fact is, any time could be the worst time for you personally to buy a property… or it could be the best time to buy.

It truly depends on your own goals, budget, timeline, risk profile, and circumstances as to whether 2021 is a good time to buy.

If you’ve just lost your job or your income is insecure in the current economic climate, then yes, this could be a risky time to commit to a mortgage; in fact, you’d struggle to get a loan.

However, if you’re financially stable and have a deposit ready to go, then some might argue that with 2% mortgage rates and prospects of strong house price growth, 2021 could be the property buying opportunity of a lifetime.

What’s ahead for our property markets for 2022?

That’s a common question people are asking now that our real estate markets are up and running again.

In my mind, we’re in for a 2-tier property market moving forward.

While most property markets around Australia have performed strongly so far this cycle (other than the inner city of high-rise apartment market), moving forward the rate of property price growth will slow and there are several reasons for this including:

  • Affordability issues will constrain many buyers. The impetus of low-interest rates allowing borrowers to pay more has worked its way through the system and with property values being 20- 30% higher than at the beginning of this cycle at a time when wages growth has been moderate at best and minimal in real terms for most Australians, means that the average home buyer won’t have more money in their pocket to pay more for their home.
  • The pent-up demand is waning – While there are always people wanting to move house and many delayed their plans over the last few years because of Covid, there are only so many buyers and sellers out there and there will be fewer looking to buy in 2022.
  • APRA – is intent on slowing our markets using macroprudential controls

This will lead to a two-tier property market – in other words, not all locations will continue growing strongly moving forward.

I can see properties located in the inner and middle-ring suburbs, particularly in gentrifying locations, significantly outperforming cheaper properties in the outer suburbs.

While the outer suburban and more affordable end of the markets have performed strongly so far, affordability is now becoming an issue as the locals have had minimum little wages growth of the time when property prices have boomed.

In these locations, the residents don’t have more money in their pay packet to pay the higher prices the properties are now achieving.

More than that, Covid19 has adversely affected low-income earners to a greater extent than middle and high-income earners who are likely to recover their income back to pre-pandemic levels more quickly, while many have not been hit at all.

And as we start to emerge from our Covid Cocoons there will be a flight to quality properties and an increased emphasis on liveability.

As their priorities change, some buyers will be willing to pay a little more for properties with “pandemic appeal” and a little more space and security, but it won’t be just the property itself that will need to meet these newly evolved needs – a “liveable” location will play a big part too.

Those who can afford it will pay a premium for the ability to work, live and play within a 20-minute drive, bike ride or walk from home.

They will look for things such as shopping, business services, education, community facilities, recreational and sporting resources, and some jobs all within 20 minutes reach.

NOW READ: The worst properties to buy in an uncertain market 

Why 2022 could be the worst time for you to buy an investment property

So back to my initial thoughts that for some people this will be the worst time to buy property.

I’ve written about this topic in detail here, but in short, you should not buy an investment property if:
    1. You are buying a property to pay less tax
      Don’t be lured into buying secondary properties that offer high depreciation allowances for excessive negative gearing.
      These new properties tend to come at a premium price, and rarely deliver capital growth for many years.
      In my mind negative gearing is not an investment strategy – it’s for short-term funding strategy which only makes sense when used to purchase high-growth investment great properties.
      These tend to be established houses, townhouses, or apartments in desirable streets in top locations in the middle ring suburbs of our three big capital cities.
    2. You are driven by FOMO – fear of missing outHouse Model On Top Of Stack Of Money As Growth Of Mortgage Credit, Concept Of Property Management. Invesment And Risk Management.
      Sure our property markets are moving surged last year, and of course, it’s human to become emotional when considering buying a home or an investment property.
      But investing emotionally leads to bad investment decisions – it’s exactly this type of emotion that makes investors fall prey to property marketers and spruikers who will offer you a way to get rich quickly.
      2022 will be a year of a flight to quality as there are more properties on the market – so don’t take shortcuts.
    3. You want to get rich quickly
      Property investing is a long-term endeavor, it is a process, not an event.
      The property you eventually purchase will be the result of many decisions that you need to make prior to even starting to search for a property.
      I’ve found it takes the average property investor 30 years to become financially free.
    4. You don’t really understand how property investment works
      Many people mistakenly believe they understand property investment because they own a house or have lived in one.
      So they end up buying a property close to where they want to live, where they want to retire or where they holiday.
      Again, these are emotional reasons to purchase a property rather than selecting based on sound investment fundamentals.
      On the other hand, successful investors have formulated a sound investment strategy that suits their risk profile and helps them achieve their long-term goals and one which has stood the test of time.
    5. You’re not financially fluent
      I found many investors are looking to invest in property to help increase their cash flow, but if they do not have the financial discipline and cash flow management skills required, taking on the extra debt of an investment property only compounds their problems.
    6. You’re looking for a multi-purpose property
      If you are buying a property with the aim of creating wealth, but it also has to be your future home or a part-time holiday home, or somewhere to retire in the future; then you’re probably wanting too much for that one little property to achieve.
    7. Your finances are not in ordermoney savings
      Property investment is a game of finance with some real estate thrown in the middle.
      To get into the property you should have a stable job, profession, or business with a steady income and need to be attractive to the banks so they lend you money, plus you should have sufficient stashed away in a financial buffer to see you through the inevitable rainy days ahead.
    8. You don’t have enough money (yet!)
      If you can’t afford an investment-grade property, either because you haven’t saved a sufficient deposit or you can’t service the loan repayments, then rather than buying a secondary property, in my mind it’s better that you wait and buy an investment-grade property.
    9. You are trying to time the market or find the next hotspot
      Sure property markets move in cycles and it would be great to buy near the bottom or find a location that will be the next hotspot, but the landscape is littered with investors who tried to time the market and failed.
      Instead, the right time to buy real estate is when your finances are in order and you’ve got the ability to purchase an investment-grade property.
      Remember there is no one property market in Australia so there will always be opportunities somewhere.

ALSO READ: 2022 predictions and planning: Part 1


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