Housing market sentiment is fading

Housing market sentiment is fading
Confidence in Australia’s housing market fell in the June quarter, according to the National Australia Bank.

The NAB Residential Property Index dropped 17 points to 14.

It is now sitting at its lowest level since mid-2016.

Confidence in housing fell in every state. Sentiment was noticeably lower in New South Wales and Victoria.

“Falling confidence reflects weaker expectations for both house prices and rents,” NAB group chief economist Alan Oster said,

“Property experts lowered their expectations in all states, except WA, with the biggest cut backs in Victoria and to a lesser extent in Queensland and NSW.”

Mr Oster said the figures showed first home buyers were more active in both new and established property markets in the June quarter but local investors had pulled back.

“Clearly, tougher measures on banks announced by regulators to rein in investor lending are being felt in this segment of the market” Mr Oster said.

He said Australia’s housing market seemed to be heading to a “cooling phase” although this was more likely to be an orderly adjustment rather than a sharp deterioration.

“Our expectations around subdued wages growth remain suggesting affordability will be a major constraint on the market, especially if credit conditions continue to tighten. This along with record levels of housing construction activity, mainly apartments, and moves to limit foreign demand for housing will likely limit the potential for future price gains,” he said.

He said he expected house prices to lift by 5 per cent this year, down from the previous forecast of 7.2 per cent, and unit price growth would more than halve to 3 per cent, compared to the forecast 6.8 per cent.

 



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