NAB leans toward conservative forecast on home values

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National Australia Bank (NAB) has toned down its house price forecasts, following the release of its quarterly survey that shows a sharp decline in industry sentiments.

From a 0.8% increase across the country’s capital cities in April, the bank is now foreseeing home values to go lower by next year, Business Insider Australia reported.

 “NAB’s view is that the weakness in dwelling prices seen over the past year is likely to persist in 2018 and 2019 – although we expect moderate rather than sharp price falls,” the bank said“The declines over 2018 to date have been more significant than initially expected and this is reflected in our revised forecasts for 2018 and 2019.”

NAB’s latest survey saw a significant decrease of 17 points to a reading of +6— the lowest level recorded since two years ago.

Market research shows that such pullbacks are because of the weakening prices in New South Wales and Victoria. In fact, the slowdown in those two states has driven the sub-index for industry confidence to fall to its lowest level yet.

Further, NAB foresees steadier house prices in major east-coast markets by 2020 after the expected declines in 2018 and 2019. “[This] implies a top-to-bottom decline of 6.5% for Sydney and 2.5% for Melbourne,” Business Insider Australia stated.

With abrupt decreases expected next year due to current falls in Brisbane, apartment prices are also projected to drop in line with house prices in 2018.

While industry professionals anticipate home values to drop in the abovementioned markets, Queensland and Western Australia’s housing markets are seen to spearhead the capital growth in 2018 and 2019.

 “Queensland is expected to lead the country for capital growth in the next 12 months, although expectations were pared back to 0.7% (2.0% in Q1 2018). WA is next best at 0.6% (1.3% in Q1 2018), followed by SA/NT (0.3% vs. 1.8% in Q1 2018),” NAB disclosed.

Respondents, meanwhile, say credit constraints are at their peak for years now, amid “tighter bank lending standards” and “increased regulatory scrutiny.”

“Any further tightening in lending standards or additional changes to government or prudential policy to address affordability or financial stability concerns are likely to have an impact on these forecasts,” said NAB’s chief economist Alan Oster.

However, Australian Prudential Regulation Authority (APRA) chairman Wayne Byres said in a speech last Wednesday said that any future tightening by the banking regulator will not make a big impact.

It is noteworthy that the result of NAB’s latest survey coincides with the shift in the outlook for house prices of ANZ in June.


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  • Steven says on 13/07/2018 05:44:33 PM

    Thank you for your articles. The current property market is a combination of many factors not least, over the top negativity from the press, credit tightening and the wish list of no more Asian buyers which have come to pass. I’m always fascinated by the term used in your articles “property professionals” I’d very much like to know what you term as such? Is it someone who has been in the industry for what period of time? Is it someone who is on the frontline selling and listing, or just a rehashed media storyteller? Please remember if you are buying and selling in the same market it’s the change over price that matters.

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