Property experts share their predictions for the Canberra market in 2022

In the 18 months he and his partner have been looking for a home, Mr Merrell said they've been forced to "move our goalposts significantly".

MORE PROPERTY NEWS:

"When we first started looking we were thinking, '$600,000 for a house in West Belconnen - that's crazy'. [Now] it's pushing $800,000, $900,000 to $1 million consistently," he said.

"It's a bit frustrating, to be honest ... just the sheer price of things."

Despite the uncertainty of the year ahead, Canberra buyers like Mr Merrell may find some comfort in the predictions from leading property figures, who say relaxed buyer competition and slower rates of growth could be on the cards in 2022.

Buyer's agent Reece Coleman of Maker Advisory said the "purchase at all costs" attitude buyers had in 2021 may be easing.

"At the end of last year we definitely saw buyer exhaustion ... they couldn't keep up with going to an auction and seeing it go for $50,000 more than [expected]," Mr Coleman said.

"We're starting to see prices settle down. We're starting to see buyers say, 'Yeah, I love the home but I'm not prepared to pay that much.'"

Mr Coleman said sellers may have to adjust their expectations in 2022.

"At the end of last year it was pretty common for a vendor to say 'The house next door just sold for $1.2 million last month, so I'll get $1.3 million for mine this month'. Vendors' expectations were rising quicker than the market," he said.

He said if more listings come back onto the market and competition relaxes among buyers, sellers will need to listen to the market and adjust their prices.

"It's great news for buyers," he said.

CoreLogic head of research Eliza Owen said it was almost certain Australia's current run of price growth had peaked in 2021.

"The constraints of slightly tighter credit conditions, the erosion of housing affordability and a higher level of listings being added to the market are expected to see softer growth rates across property values in 2022," she said.

Ray White chief economist Nerida Conisbee agreed, saying the price surges of 2021 aren't likely to be repeated.

"While the commentary around price falls is again ramping up, the reality is that at this stage it's looking unlikely that prices will see a sharp decline in 2022," she said.

"We're heading into a period of strong economic growth, rather than a recession, and business and consumer confidence is high. Nevertheless, it's unlikely that we will continue to see the same rate of growth over the next two years that we have seen over the past two years."

Construction costs and delays were a recurrent theme of 2021 and could continue to be for some time, Ms Conisbee said.

"It's likely that these higher costs will continue in the first half of 2022 and may also be exacerbated by high wages costs and stockpiling of materials," she said.

ALSO IN THE NEWS:

"By the second half of the year, it's likely that many of the supply disruptions will have flowed through and construction costs will start to moderate."

Mr Coleman said rising construction costs may change the way buyers behave in 2022.

"If somebody's looking with a fixed budget, they factor in what they're going to spend on the property. And if they've got to spend [more on construction] that means they've got to buy the property cheaper," he said.

"I also think that we're going to see, in the short term, properties that are fully renovated [sell for] a premium, as there's no work to be done."

With the median house price in Canberra now beyond $1 million, some home buyers say they've been priced out of the housing market.

The median value of a Canberra unit is now $584,100, according to CoreLogic figures.

Mr Coleman said this price disparity will see many buyers forced to steer away from houses in 2022.

"I think you're going to see a lot more of a surge into the three-bedroom apartments and the townhouses in Canberra," he said.

For Mr Merrell, the dream home is still a house with some land and "space to move". But at this stage, he and his partner have discussed buying a townhouse or large apartment.

While the buying criteria might change, Mr Merrell said he's "extremely motivated" to secure a property in 2022.

"It's frustrating and a bit disheartening to see the prices so high, but we know that when we buy the home that we want, it'll be the home that we live in and love," he said.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: