Rent is set to increase dramatically in the new year, according to experts surveyed by Finder, as reopening borders return skilled migrants and international students to the country.
The survey of economists found 73% predicted the forces which have seen the gap between incomes and average rent widen significantly in recent months will intensify as Australia sees an influx of new residents in 2022.
While rental prices have remained stable, and even decreased in major capital cities most impacted by the loss of international students and migrant workers, across most of the country, including coastal and regional Australia, rent has been driven up by an exodus of residents away from capital cities.
Regional Australia recorded an annual rate of rental growth of 12.5% in September 2021, the highest rate on record since CoreLogic began its index in 2005.
December's Finder RBA Cash Rate Survey heard from 37 experts and economists on future cash rate moves and the impact this will have on property and rental prices in 2022.
While all said they expected the cash rate to hold in December, the vast majority predicted rental prices would increase in response to the reopening of international borders.
Graham Cooke, head of consumer research at Finder, said renters should start preparing for higher housing costs.
He said that the higher vacancy rates in major capital cities would likely tighten.
"The pandemic turned the rental market on its head in some areas, with vacancy rates increasing in major capital cities like Sydney and Melbourne," Cooke said.
"As international students and backpackers return to our shores, we're going to see demand quickly flow back."
Finder's survey also showed few economists thought the housing market would deflate in 2022, however employment and wage growth continue to look strong.
Cooke said while there had been some forecasts of price drops in 2022, Finder's survey results pushed back against this assumption.
Research director at Corelogic Tim Lawless said last week the property intelligence group's research pointed to an end to the explosive price growth that dominated 2021 in the year ahead.
Lawless said an end to a surge in listings by 47%, along with the end of incentives like stamp duty concessions would begin to cool the market.
"Combining these factors with the subtle tightening of credit assessments set for November 1, it's highly likely the housing market will continue to gradually lose momentum," Lawless said.
Cooke said over 80% of Finder's experts think "it is unlikely that property prices will fall by 5% or more next year, as has been suggested in some quarters," but rather prices would continue to rise.
"Expect a robust but unspectacular 2022," he said.
"Not only will property values continue to rise, albeit perhaps more slowly, rental prices are also set to jump significantly."
Finally, the survey recorded a marked uptick in expectations the cash rate would rise in 2022.
"Only a few months ago, there was little expectation of any movement until 2023. Now half of the experts are predicting a rise next year," Cooke said.
Amid climbing commercial borrowing costs, RateCity research director Sally Tindall said bond investors were betting aggressively on the idea the RBA would hike the cash rate as soon as May next year - well before RBA governor Philip Lowe's 2024 guidance.
More than two thirds of experts told Finder they expect to see lenders raise their interest rates out of cycle before the RBA increases the cash rate.
"Those who think their rate will stay low just because the cash rate is holding would be wise to be prepared for an out-of-cycle hike," Cooke said.
David Robertson of Bendigo Bank said with economic recovery underway, together with rising inflation, we'll see pressure on the RBA to increase official interest rates by next December.
"Although there is uncertainty around the new Omicron variant - assuming vaccines and boosters are effective for Omicron, the recovery should continue and higher rates should be expected through financial year 22/23."
Shane Oliver, chief economist at AMP Capital, told Finder, "The combination of slightly-higher-than-expected inflation than the RBA is anticipating, a decline in unemployment to around 4% over the next 12 months and a faster-than-expected pick-up in wages growth taking it to near 3% are expected to see the RBA start raising interest in November next year."
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