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.
Amidst General Market Slowdown, How Is The Rental Market Faring?
Auctions Plunge Through The First Week Of July
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now
Top Suburbs :
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.
We value your privacy and treat all your information seriously - you can check out