The COVID-19 pandemic has intensified the speed and power of current trends, making this year one of the wildest in real estate history. As a year-long housing shortage collided with extremely low mortgage rates, changing work patterns, and increased chances for young consumers to acquire their first houses, the pandemic sparked an intense home-buying rush.
Home prices have skyrocketed to new all-time peak levels. Interest rates have plunged to new lows. In the midst of it all, the new online home buying and selling period grew stronger.
Furthermore, in the 2021 real estate market, like almost all modern macroeconomic trends — from rising prices to supply chain troubles to massive unemployment — made an appearance, enhancing the benefits of existing property owners, presenting a challenge to the future homebuyers, and, ultimately, expanding wealth inequality globally.
Most importantly, housing prices are likely to climb again this year, perhaps at a slower pace than it was last year. As a result, prospective investors seeking a foothold in the real estate market in 2022 will encounter difficulties.
Analysts also expect that two important 2021 trends will likely go on: limited home availability and supply chain concerns, which will hinder building and renovations. In the meantime, two new elements are expected to appear on the scene: inflation rates and higher interest rates.
Here are some predictions for 2022 from real estate specialists.
The Cost of Living Continues to Grow
In 2022, you are lucky if you already own a property. Throughout the pandemic, soaring home values have remained to boost equity for homeowners in several regions of the world. In 2022, the real estate market is expected to be intense.
Housing prices are predicted to increase by 6.6 percent, and housing costs are likely to increase by 2.9 percent following the increase in 2021. A gradual increase in mortgage rates will render housing cost a primary priority for home purchasers, particularly the 45 million Millennials between the ages of 26 and 35, who are potential first-time homeowners.
Although there will be a minor increase in housing supply, demand from these youth will keep the market strong and fast-paced as developers continue to increase output, expanding the sales of single-family houses by 5% in 2022.
There Will Be More Delays Caused by Clogged Supply Networks
The COVID-19 outbreak has produced supply chain interruptions, which have slowed shipments and hindered housing construction and development. This, combined with the growing prices of existing properties across the United States and worldwide, is creating the market even more aggressive and intense. And the amount of people wanting to buy and invest in real estate is rising, mainly because of the influx of millennials who are now into the real estate market.
Inflation and Rising Interest Rates
In 2022, potential homebuyers should keep watch out for certain irregularities. The Federal Reserve has pledged to stop buying bonds and raise interest rates sometime in 2022.
A boost in interest rates would only make life more complicated for people trying to buy a home since they will increase the average monthly payment and the overall value of a mortgage throughout the loan.
Do not, however, forget to take into account inflation. Both the cost of raw materials and skilled laborers would almost probably rise due to this. Real estate experts and analysts predict a 5.7 percent increase in yearly average housing values in 2022.
Inventory Will Most Likely Remain Low
The scarcity of available properties will most likely persist in the year 2022. Although available stock in the market remains low, it is marginally greater than it was at the beginning of 2021. The real estate market may not be as crazy as in previous months; it is somewhat more competitive and stronger than it was during the pre-pandemic.
According to experts, the COVID-19 pandemic has helped strengthen the real estate market by reducing the availability of homes for sale and boosting consumer demand through low borrowing rates and higher incentives. With sustained low inventory, the market will stay strong during 2022. Yet, don’t anticipate property demand or the overall real estate market as busy as in 2021.
Real Estate Industry in the PH
According to real estate specialists, in 2022, the Philippine real estate market is expected to recover. The increased consumer and company confidence, along with the improved immunization rate and vaccination efforts, will help boost the country’s real estate industry.
Despite introducing a work-from-home set-up, some businesses, such as outsourcing services, are still looking for office space around the nation. These leasing inquiries are expected to materialize over the following 12 months, anchoring a rebound in office space take-up both around and outside the Metro.
The total amount of new office space projected to be available is 723,400 square meters. Deals are starting to take up outside of Metro Manila this year.