Banks warn of house price falls

Both the National Australia Bank and ANZ have forecast that house prices will continue to track downwards in 2019.

The ANZ-Property Council Survey for the September quarter shows that sentiment in Australia’s property sector has fallen from last quarter’s record peak.

The survey shows that property prices are being dragged down by the residential sector with the outlook for capital values in residential property deteriorating markedly.

ANZ head of Australian economics David Plank warned this could have an impact on the broader economy.

“Easing dwelling investment will be a drag on Australia’s economy later this year. Falling housing prices and the absence of a wealth effect will weigh on household spending, at least to some extent,” Mr Plank said.

“The tightening in credit availability and the associated weakening of the residential housing market do increase the economy’s vulnerability to additional shocks…We are particularly focused on the risk of a global trade dispute. The combination of a global slowdown triggered by trade and tighter credit domestically could be particularly damaging for Australia’s economic prospects.”

The NAB’s Quarterly Residential Property Survey found that the falls in house prices had been “more significant than initially expected”.

It showed that sentiment towards the Australian housing market in the second quarter fell to its lowest level in 2 years and is now well below average.

NAB has forecast dwelling price weakness persisting in 2018 and 2019. Still, it expects moderate rather than sharp price falls.

“We now expect a slightly sharper decline in 2018 and a small fall in 2019…driven by continued weakness in Sydney and Melbourne as well as a sharper decline in unit prices in Brisbane,” the bank’s economists said.

“NAB also expects house prices to flatten in aggregate in 2020 – implying a peak to trough fall of 6.5% and 2.5% in Sydney and Melbourne respectively.”

The warnings from the NAB and ANZ come after CoreLogic data last week revealed that house prices were had fallen for the ninth consecutive month and building approvals were trending down.

 



An award winning author and journalist, commentator, lecturer, and speaker, Leon is a freelance business journalist who covers a range of areas including politics, strategy, globalization, leadership and all the big trends ahead. His main skill is summing up all the news that’s around. For the last 30 years, his main focus has been on management issues. He also produces two podcasts for RMIT University, Talking Business and Talking Technology. Leon has worked for Fairfax, News Limited, AAP and the Herald and Weekly Times.


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